Christine Varney, President Barack Obama's nominee to be the chief antitrust enforcer at the Justice Department, said Tuesday she supported legislation to strip long-standing antitrust exemptions for the freight railroad industry and wondered why certain controversial mergers weren't challenged by the Bush Administration.

Varney, testifying before a Senate panel considering her nomination, promised vigorous and consistent antitrust enforcement and pledged better collaboration with the Federal Trade Commission, which shares antitrust regulatory authority with the department.

Responding to questions from lawmakers, Varney said she wasn't privy to the department's internal review of recent controversial deals, including the satellite radio merger of Sirius and XM and the merger of Whirlpool Corp. and Maytag Corp.

"But clearly from the outside," she said, "those look like mergers in horizontal markets that one wonders why they were not challenged."

Varney described as "terrific" proposed legislation that would repeal legal provisions that make railroad mergers exempt from antitrust law and that allow freight railroads to engage in collective rate-making.

"I support your bill," Varney told Sen. Herb Kohl, D-Wis., who sponsored the legislation. The Senate Judiciary Committee passed the bill last week and sent it to the full Senate for consideration.

The legislation stands to impact the four rail companies that dominate the rail shipping business: Norfolk Southern Corp. (NSC), Burlington Northern Santa Fe Corp. (BNI), CSX Corp. (CSX) and Union Pacific Corp. (UNP).

In other testimony, Varney said she supported the FTC's attempts to bar so-called "pay-for-delay" drug settlements in which brand-name pharmaceutical companies pay other drug makers to delay the introduction of competing generic drugs.

During the Bush Administration, the Justice Department didn't back the FTC when the commission sought to appeal the issue to the U.S. Supreme Court.

Varney, who served as an FTC commissioner from 1994 to 1997, said antitrust policies and practices at the Justice Department and the commission have "unfortunately diverged" in recent years and she said the two agencies should renew their collaboration on antitrust regulation.

The FTC has a reputation for taking a more hands-on approach to merger enforcement than the Justice Department. In addition, the two agencies split badly last September when the FTC refused to join a wide-ranging report written by the Justice Department that sought to clarify antitrust guidelines on illegal monopoly conduct.

Varney has been a partner at the Hogan & Hartson law firm in Washington since 1997. She served most recently as personnel counsel to the Obama transition team.

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com