374 U.S. 321, 83 S. Ct. 1715 (1963)
The United States brought this civil action in the United States District Court for the Eastern District of Pennsylvania to enjoin a proposed merger between The Philadelphia National Bank and Girard Trust Corn Exchange Bank.1 PNB is a national bank with assets exceeding one billion dollars that ranks as the second largest of the forty-two commercial banks headquartered in the Philadelphia metropolitan area.2 Girard is a state bank and member of the Federal Reserve System with assets of approximately seven hundred fifty million dollars that ranks third in the same area.3 Both banks maintain offices throughout the four-county Philadelphia metropolitan area consisting of the city and its three contiguous counties.4
In November 1960 the boards of directors of both banks approved an agreement to consolidate under the PNB charter.5 Under the terms Girard stockholders would surrender their shares in exchange for 1.2875 shares in the resulting bank for each Girard share while PNB stockholders would retain their certificates.6 The Comptroller of the Currency received reports from the other banking agencies and the Attorney General all advising that the transaction would produce substantial anticompetitive effects.7 On February 24, 1961, the Comptroller approved the merger.8 The United States filed suit the following day.9
At trial the government relied primarily on statistical evidence concerning market structure together with testimony from economists and bankers describing the area of free competition that remained despite extensive regulation.10 The defendants presented contrary evidence on market definition.11 They also offered testimony from bankers that the merged institution would possess greater prestige and a higher lending limit enabling it to compete more effectively with large out-of-state banks and to attract new industry to Philadelphia.12 After trial the District Court entered judgment for the appellees.13
The United States appealed directly to the Supreme Court under section 2 of the Expediting Act and probable jurisdiction was noted.14 Since 1950 PNB had acquired nine formerly independent banks and Girard had acquired six.15 These acquisitions accounted for fifty-nine percent and eighty-five percent respectively of the banks' asset growth during the period.16 The number of commercial banks with head offices in the four-county area had declined from one hundred eight in 1947 to forty-two at the time of suit.17
Whether section 7 of the Clayton Act applies to mergers of commercial banks accomplished through asset acquisitions?18
Yes. The proposed consolidation under the PNB charter requires Girard stockholders to surrender shares for 1.2875 shares in the resulting bank.22 This structure fits the stock-acquisition provision as construed to cover mergers.23 The transaction was structured as a consolidation rather than a pure assets purchase.24 This outcome is consistent with the congressional design to close the loophole for all forms of mergers.25
Section 7 of the Clayton Act applies to the proposed merger between PNB and Girard.26
Related opinions on this issue
Joined by Justice Stewart
Justice Harlan dissents on the ground that the language of the 1950 amendment and its legislative history show Congress did not intend section 7 to reach bank mergers.27 Bank mergers are accomplished by asset acquisitions or consolidations rather than stock acquisitions.28 This conclusion follows from the explicit limitation to FTC-jurisdiction corporations and the reenactment of stock-acquisition language previously interpreted not to cover mergers.29
Harlan emphasizes that Congress went at the matter in a peculiar way if it intended to cover bank mergers.30 The limitation to corporations subject to the Federal Trade Commission excludes banks.31 The reenacted stock-acquisition language had already been construed to exclude the consolidation technique customarily used in banking.32
Whether the Bank Merger Act of 1960 precludes application of the antitrust laws to bank mergers approved by the Comptroller of the Currency?33
Repeals of the antitrust laws by implication from a regulatory statute are strongly disfavored.34 Such repeals require plain repugnancy between the regulatory scheme and the antitrust provisions.35 The Bank Merger Act confers no express immunity.36 It assigns the banking agencies only an advisory role on competitive factors without displacing judicial enforcement.37
No. The Bank Merger Act requires the Comptroller to consider competitive effects but provides no immunity from section 7.38 It does not create a regulatory scheme repugnant to antitrust enforcement.39 The agencies lack authority to enforce the antitrust laws or grant exemptions.40 The established facts show that the Comptroller approved the merger after receiving reports from the Attorney General and other agencies advising of anticompetitive effects.41
The United States filed suit the following day. No provision in the Act bars such action.42
The Bank Merger Act of 1960 does not preclude application of section 7 of the Clayton Act to the proposed bank merger.43
Related opinions on this issue
Joined by Justice Stewart
Justice Harlan dissents on the ground that the legislative history of the Bank Merger Act demonstrates Congress deliberately chose a regulatory approach under banking laws rather than the Clayton Act test.44 Congress repeatedly rejected proposals to extend section 7 to bank mergers.45 It instead vested primary responsibility in the banking agencies with competition as only one factor among others in the public-interest determination.46
Harlan stresses that the Bank Merger Act would be almost completely nullified by the majority's holding.47 The Attorney General's report would no longer be truly advisory.48 Bank mergers would be judged solely from their competitive aspects without considerations peculiar to banking.49
Whether the four-county Philadelphia metropolitan area constitutes the geographic market for evaluating the competitive effects of the proposed merger?50
The relevant section of the country is the four-county Philadelphia metropolitan area of effective competition where the effect of the merger on competition will be direct and immediate.51 This area is determined by the geographic structure of supplier-customer relations and the area to which purchasers can practicably turn.52 Convenience of location localizes banking competition.53
Yes. The four-county area is the region in which the vast bulk of PNB's and Girard's business originates.54 State law permits branching there.55 Customers of intermediate size find it practical to bank in that area.56 The established facts show both banks maintain offices throughout the city and three contiguous counties.57 The number of area banks declined from 108 in 1947 to 42.58 Large and small customers alike are localized by convenience despite some business outside the area.59
The four-county Philadelphia metropolitan area constitutes the geographic market.60
Whether the proposed merger may substantially lessen competition in commercial banking in the four-county Philadelphia metropolitan area?61
A merger that produces a firm controlling an undue percentage share of the four-county Philadelphia metropolitan area and results in a significant increase in concentration is so inherently likely to lessen competition substantially that it must be enjoined absent clear evidence to the contrary.62
Yes. The merger would give the resulting bank approximately 36 percent of area assets, 36 percent of deposits, and 34 percent of net loans, while the top two banks would control 59 percent.63 This represents a significant increase in concentration.64 The established facts show PNB and Girard as the second- and third-largest banks whose prior acquisitions accounted for substantial portions of their growth, and after the merger the four largest banks would control 78 percent of assets.65
No evidence in the record rebuts the inference of anticompetitive effects arising from these figures.66
The proposed merger may substantially lessen competition in commercial banking in the four-county area and must be enjoined.67