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United States v. First City Nat'l Bank

Supreme Court of the United States

February 20-21, 1967, Argued ; March 27, 1967, Decided 1

No. 914

Opinion

 [*362]   [***153]   [**1090]  MR. JUSTICE DOUGLAS delivered the opinion of the Court.

These civil suits were filed [****4]  by the United States under § 7 of the Clayton Act, 38 Stat. 731, as amended, 64 Stat. 1125, 15 U. S. C. § 18, to prevent two bank mergers -- one in Texas between the First City National Bank of Houston and the Southern National Bank of Houston, and one in Pennsylvania between  [***154]  the Provident National Bank and the Central Penn National Bank, both in Philadelphia.

The Comptroller of the Currency approved the mergers under the Bank Merger Act of 1966, 80 Stat. 7, 12 U. S. C.  [*363]  § 1828 (c) (1964 ed., Supp. II).  The United States thereupon brought these suits in the respective District Courts and the Comptroller intervened in them. The District Courts dismissed the complaints. No. 914 (unreported); No. 972, 262 F.Supp. 397. The United States appealed, 32 Stat. 823, as amended, 15 U. S. C. § 29, and we noted probable jurisdiction, 385 U.S. 1023, 1024.

It is suggested that the complaints are defective in that they fail to state that the actions are brought under the Bank Merger Act of 1966, do not even mention the Act, and that, therefore, these cases should be remanded [****5]  to allow the Government to amend the complaints.

 The Bank Merger Act of 1966 provides that "any action brought under the antitrust laws" shall be brought  [**1091]  within a specified time (12 U. S. C. § 1828 (c) (7) (A)); it also specifies the standards to be applied by a court in a judicial proceeding challenging a bank merger "on the ground that the merger . . . constituted a violation of any antitrust laws other than section 2 of [the Sherman Act]" (12 U. S. C. § 1828 (c) (7) (B)); and it provides immunity from such an attack if those standards are met. Section 1828 (c) (8) provides that, "for the purposes of [§ 1828 (c)], the term 'antitrust laws' means . . . [the Sherman Act, the Clayton Act], and any other Acts in pari materia." (Emphasis added.) Thus, an action challenging a bank merger on the ground of its anticompetitive effects is brought under the antitrust laws. Once an action is brought under the antitrust laws, the Bank Merger Act provides a new defense or justification to the merger's proponents -- "that the anticompetitive [****6]  effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to  [*364]  be served." 12 U. S. C. § 1828 (c)(5)(B). There is no indication that an action challenging a merger on the ground of its anticompetitive effects is bottomed on the Bank Merger Act rather than on the antitrust laws. What is apparent is that Congress intended that a defense or justification be available once it had been determined that a transaction would have anticompetitive effects, as judged by the standards normally applied in antitrust actions. Thus, the Government's failure to base the actions on the Bank Merger Act of 1966 does not constitute a defect in its pleadings. Nor is the Government's failure to mention the Bank Merger Act fatal, for, as we shall see, the offsetting community "convenience and needs," as specified in 12 U. S. C. § 1828 (c)(5)(B), must be pleaded and proved by the defenders of the merger.

An application for approval [****7]  of the Texas merger was made to the Comptroller of the Currency pursuant to 12 U. S. C. § 1828 (c) (5) (B), which ] provides that he shall not approve the merger "whose effect in any section of the country may be substantially to lessen competition,  [***155]  or to tend to create a monopoly, or which in any other manner would be in restraint of trade, unless [he] finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served." Requests were made of the Attorney General and the Federal Reserve Board pursuant to 12 U. S. C. § 1828 (c) (4) for their views and both submitted reports to the Comptroller that the merger would have serious anticompetitive effects. The Comptroller nonetheless approved it.

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386 U.S. 361 *; 87 S. Ct. 1088 **; 18 L. Ed. 2d 151 ***; 1967 U.S. LEXIS 2781 ****; 1967 Trade Cas. (CCH) P72,048

UNITED STATES v. FIRST CITY NATIONAL BANK OF HOUSTON ET AL.

Prior History:  [****1]  APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS.

Disposition: No. 914; No. 972, 262 F.Supp. 397, reversed.

CORE TERMS

merger, banks, bank merger, courts, anticompetitive, convenience, anti trust law, antitrust, effects, antitrust action, Clayton Act, outweighed, hearings, cases, suits

Antitrust & Trade Law, Regulated Industries, Financial Institutions, Bank Mergers, Banking Law, Banking & Finance, Commercial Banks, Mergers & Consolidations, Mergers & Acquisitions Law, Antitrust, Market Definition, General Overview, Bank Expansions, Regulated Industry Mergers, Antitrust Statutes, Clayton Act, Civil Procedure, Appeals, Standards of Review, De Novo Review, Administrative Law, Judicial Review, De Novo Standard of Review, Remedies