Opinion ID: 109098
Heading Depth: 2
Heading Rank: 2

Heading: The Proceedings.

Text: In February 1971, Marine, NBC, and WTB agreed to merge the latter into NBC. NBC, as the surviving bank, would operate all eight banking offices of WTB as branches of NBC. In March 1971, NBC and WTB applied to the Comptroller of the Currency pursuant to the Bank Merger Act of 1966 for approval of the merger. [9] As required by that Act, see 12 U. S. C. ง 1828 (c) (4), the Comptroller requested reports on the competitive factors involved from the Attorney General, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System. Each of these agencies submitted a negative report on the competitive effects of the merger. The Attorney General relied on the reasons advanced in the instant case. The latter two agencies based their conclusions primarily on the degree of concentration in commercial banking in Washington as a whole. The Comptroller approved the merger in a report issued September 24, 1971. He concluded that state law precluded NBC from branching in Spokane and effectively prevented NBC from causing a new Spokane bank to be formed which could later be treated as a merger partner. He noted that state law prevented the only independent small bank with offices located within the city boundaries of Spokane from merging with NBC, since that bank was state chartered, had been founded in 1965, and was subject to the minimum 10-year restriction against sale of a new bank set out in Wash. Rev. Code Ann. ง 30.08.020 (7) (1961 and Supp. 1973). The Comptroller relied heavily on the view that the merger would contribute to the convenience and needs of bank customers in Spokane by bringing to them services not previously provided by WTB. Acting within the 30-day limitation period set out in the Bank Merger Act of 1966, 12 U. S. C. ง 1828 (c) (7), the United States then commenced this action in the United States District Court for the Western District of Washington, challenging the legality of the merger under ง 7 of the Clayton Act. [10] As a result, the merger was automatically stayed. 12 U. S. C. ง 1828 (c) (7) (A). Pursuant to 12 U. S. C. ง 1828 (c) (7) (D), the Comptroller intervened in support of the merger as a party defendant. Prior to trial the United States dropped all allegations concerning actual competition between the merger partners. [11] The remainder of the complaint addressed the subject of potential competition. The United States sought to establish that the merger may . . . substantially. . . lessen competition within the meaning of ง 7 in three ways: by eliminating the prospect that NBC, absent acquisition of the market share represented by WTB, would enter Spokane de novo or through acquisition of a smaller bank and thus would assist in deconcentrating that market over the long run; by ending present procompetitive effects allegedly produced in Spokane by NBC's perceived presence on the fringe of the Spokane market; and by terminating the alleged probability that WTB as an independent entity would develop through internal growth or through mergers with other medium-size banks into a regional or ultimately statewide counterweight to the market power of the State's largest banks. The Government's first theoryโalleged likelihood of de novo or foothold entry by NBC if the challenged merger were blockedโwas the primary basis upon which this case was presented to the District Court. [12] At the close of final oral argument following a week-long trial, the District Judge ruled for the defendants from the bench. Two weeks later he adopted without change the defendants' proposed findings of facts and conclusions of law, the latter consisting of seven sentences. 1973-1 Trade Cas. ถ 74,496, p. 94,244 (1973). [13] The court found that the merger would substantially increase competition in commercial banking in the Spokane metropolitan area and would have no inherent anticompetitive effect . . . . Ibid. In light of the legal and economic barriers to any other method of entry, the court further found no reasonable probability that, absent the challenged merger, NBC would enter the Spokane market in the reasonably foreseeable future. Id., at 94,245. According to the District Court, Washington law forbade NBC from establishing de novo branches in Spokane, and the Government had failed to establish that there was any existing bank in Spokane other than WTB available for acquisition by NBC on any reasonably acceptable basis at any time in the foreseeable future, or at all. Ibid. Moreover, any attempt by NBC to enter de novo by assisting in the formation of and then acquiring a newly chartered bank in Spokane even if it could be legally accomplished, [14] or to undertake a foothold acquisition, would not be economically feasible. Ibid. In addition to noting the past and projected slow growth of the Spokane area, the court found that the ability to branch in a metropolitan area was essential to effective competition in the banking business. Ibid. Under state law, NBC would be unable to open new branch offices in Spokane if it made a foothold acquisition or helped form and then acquired a new bank. These and other factors rendered negative the prospects for growth of a foothold acquisition or of a sponsored bank started from scratch. Ibid. This was confirmed by the experience of another large banking organization not based in Spokane that had entered the city through a foothold acquisition in 1964 and subsequently had been unable to expand the market share of the acquired bank. Id., at 94, 245-94,246. The court found no perceptible procompetitive effect deriving from NBC's premerger presence on the fringe of the Spokane market. Id., at 94,246. It also held that the Government had failed to carry its burden of proving a reasonable probability that WTB, absent the merger, would expand beyond the Spokane market by de novo growth or through combination with another medium-size bank. Ibid. It found no probability that NBC would be entrenched as a dominant bank in the Spokane metropolitan area as a result of the merger, and it could find no likelihood that the merger would trigger a series of defensive mergers by other banks in the State. Id., at 94,246-94,247. [15] On the basis of its findings, the District Court dismissed the Government's complaint. The Government thereupon brought this direct appeal under the Expediting Act, 32 Stat. 823, as amended, 15 U. S. C. ง 29. We noted probable jurisdiction. 414 U. S. 907 (1973).