United States v. Marine Bancorporation, Inc.

United States v. Marine Bancorporation, Inc.

Opinion

 [*605]   [***986]   [**2861]  MR. JUSTICE POWELL delivered the opinion of the Court.

The United States brought this civil antitrust action under § 7 of the Clayton Act, 38 Stat. 731, as amended, 15 U. S. C. § 18, to challenge a proposed merger between two commercial banks. The acquiring bank is a [****7]  large, nationally chartered bank based in Seattle, Washington, and the acquired bank is a medium-size, state-chartered bank located at the opposite end of the State in Spokane. The banks are not direct competitors to any significant degree in Spokane or any other part of the State. They have no banking offices in each other's home cities. The merger agreement would substitute the acquiring bank for the acquired bank in Spokane and would permit the former for the first time to operate as a direct participant in the Spokane market.

The proposed merger would have no effect on the number of banks in Spokane. The United States bases its case exclusively on the potential-competition doctrine under § 7 of the Clayton Act. It contends that if the merger is prohibited, the acquiring bank would find an alternative and more competitive means for entering the Spokane area and that the acquired bank would ultimately develop by internal expansion or mergers with smaller banks into an actual competitor of the acquiring bank and other large banks in sections of the State outside Spokane. The Government further submits that the merger would terminate the alleged procompetitive influence that [****8]  the acquiring bank presently exerts over Spokane banks due to the potential for its entry into that market.

 After a full trial, the District Court held against the Government on all aspects of the case. We affirm  [***987]  that court's judgment. We hold that ] in applying the potential-competition  [*606]  doctrine  [**2862]  to commercial banking, courts must take into account the extensive federal and state regulation of banks, particularly the legal restraints on entry unique to this line of commerce. The legal barriers to entry in the instant case, notably state-law prohibitions against de novo branching, against branching from a branch office, and against multibank holding companies, compel us to conclude that the challenged merger is not in violation of § 7.

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