Legal Document

41 United States Supreme Court Reports Lawyer’s Edition 2d Series KF101.8 U54 1016 94 Reporter 2788 418 U.S. 656 UNITED STATES, Appellant,v.The CONNECTICUT NATIONAL BANK et al. Number 73—767. Argued April 23, 1974. Decided June 26, Syllabus The brought this civil antitrust action under § 7 of the Clayton Act challenging a proposed consolidation between Connecticut National Bank (CNB) and First New Haven (FNH), which are, respectively, fourth eighth largest commercial banks in Connecticut. operate contiguous areas State, CNB having headquarters Bridgeport, with 51 offices there nearby towns; FNH Haven, 22 towns. Government contended that merger would eliminate significant potential competition banking Bridgeport metropolitan other District rejected Government's arguments support position, relying on state law restraints de novo branching, two banks' expansion plans capabilities, posture national regulatory officials regarding issuance new bank charters, existence economic feasibility possible foothold acquisitions. court concluded is not distinct line commerce relevant geographic market, or 'section country' provision, State as whole. Held: has its town approximately 19 miles to northeast along Long Island Sound. At end 1972, it held 4.1% deposits State. operates surrounding 1. erred holding appropriate 'line commerce' within meaning included both savings banks. Pp. 660—666. 2. further ruling market In potential-competition case like this, must be defined localized area acquired insignificant, direct banks, albeit acquiring bank. versus Marine Bancorporation, 602, 2856, 978. 666—668. 3. On remand, make determination each bulk customers may turn for alternative services, making will aided by following considerations: (i) burden producing evidence define markets; (ii) satisfying (as correctly held) cannot rely only Standard Metropolitan Statistical Areas; (iii) boundaries, although significant, are controlling. 673—673. 4. contention whole, though without merit, supra. Pacific KF135 P2 672—673. 362 F.Supp. 240, vacated remanded. Howard E. Shapiro, Washington, D.C., appellant. George D. Reycraft, appellees others. Lee Loevinger, appellee Comptroller Currency. Mr. Justice POWELL delivered opinion Court. 1 This concerns legality nationally chartered operating adjoining regions Act, 38 Statutes-at-Large 731, amended, 15 Code KF62 18. Following lengthy trial basis extensive findings conclusions, dismissed complaint. 240 (1973). appeal pursuant Expediting 32 823, Annotated KF65 U5 29, noted probable jurisdiction, 414 1127, 863, 751 (1974). 2 desiring consolidate, have southwestern portion Connecticut, maintains situated Sound 60 from York City. year-end 6.2% located towns extreme southwest section 3 4 whole at 1971, five 61% 10 83% such Two large based Hartford, & Trust company Hartford Bank, essentially statewide. they had 41% total 5 so-called 'four-town area' Haven. assured Court, however, implementing divest themselves sufficient number fourtown render insignificant degree overlap their actual operation. divestiture plan eliminated any difficulties presented competitors. F.Supp., 268—270, 286. pursued point appeal. Accordingly, been us strictly extension part join FNH's charter (with Bridgeport). It no effect either area. posture, presents potential- issues similar those raised Inc., 6 arguments, factors state-law branching,1 capabilities 286—288. As we today Bancorporation case, these analogous considerations take into account determining mergers We unable, reach question whether assessed import instant case. also determined against backdrop properly product markets. See U.S., 618, S.Ct., 2868. our view, definition concepts, ascertain degree, if any, errors influenced conclusions regard arguments. Court's judgment remanded reconsideration. * 281. recognized conclusion departed holdings in, e.g., Phillipsburg 399 350, 359 362, 90 2035, 2041, 26 658 (1970), Philadelphia 374 321, 356—357, 83 1715, 1737, 915 (1963). But view pronouncements 'were intended ironclad, hard fast rules require don blinders block out true competitive situation existing every set circumstances.' 280. 8 Several led 'savings substantial providing product-services consumers . .,' '(t) he cold, realities fierce competitors state.' Ibid. near future permitted offer one traditional indicia personal checking accounts. Conn.Pub.Act 73—195 (May 14, 1973). pointed compete real estate mortgages, loans, IPC (individual, partnership, corporate) deposits, and, found, loans. If cited Continental Can Co., 378 441, 84 1738, 12 953 (1964), proposition 'complete industry overlap' required establish 7. relied omission 'in phrase Merger 1966, 1828(c)(5)(B), an essential respects tracks language Act.2 Finally, distinguished supra, pointing absence markets cases. caused 'shade' (i.e., reduce) concentration ratios presence Id., 285. 9 complete agreement do blind itself realities. Similarly, doubt record 'fierce competitors,' see 280, identical fungible services. was correct interindustry need shown.' 457, 1747. declared Can, 'we recognize meaningful where found exist.' 449, 1743. Nonetheless, hold several reasons mistaken including same purposes dealt briefly. matter concluding 1966 alters standards defining Third 390 171, 182 n. 15, 88 882, 889, 1015 (1968). 359—362, 2041. Moreover, determinative. cases faced loan associations credit institutions. See, 357 34, 1738; 306 645, 649 (NJ 1969). instances nevertheless viewed business sufficiently institutions merit treatment separate Analogous distinctions, perhaps sharply defined, controlling here. 11 believe overestimated fact exists To sure, measure similarity services marketed categories banks.3 stage development treat them together Despite strides made toward parity latter continue able provide cluster former cannot, particulatly customers, repeatedly particularly provided sets apart 360, 2041: 13 'Philadelphia emphasized products full-service trade reality makes commerce. Commercial financial wide variety services—some unique others gathered place. clustering facilitates convenient access all customers. .' (Emphasis original.) 14 From vantage least consumer services—the enterprise—commercial 'cluster services' counterparts not. facts indicate differences what can important category 'meaningful competition' existed supported record. generally speaking, relatively short-term loans enterprises sizes, usually inventory working capital. 1971 outstanding $1.03 billion loans.4 Savings comparison, $26 million time.5 disparity figures demonstrates bankloan controlled almost exclusively credit-card plans, securities purchases, trust investment computer letters credit. 16 soon some 1973).6 increase because demand traditionally attribute even authority allow serve who constitute percentage clientele statute empowering forbids marketing service anyone 'for purpose of, connection with, carrying business, trade, occupation profession.' §§ 1(a), 5. Thus, restricted offering 17 say, involving never consider commerce, how behavior. unrealistic distinguish Act. well reached when become participants enterprises. But, adherence tests forth earlier cases, constrained follow, yet reached. remand should market. II 18 ruled country,' 7, 283. think reasons. were then analyze but direct-competition firms aggregate share 10%. Even figure 'shaded' factor 10% influence id., 260; 364 40, 1742, create firm 9% statewide commercial-bank deposits. Mergers producting smaller shares less concentrated illegal E.g., Von's Grocery 384 270, 86 1478, 555 (1966). (or pertinent appeal). statewide, nor general rule utilize basis. sections segment Although presumably small broader basis, undoubtedly originates locally. For example, 'about 88% CNB's deposit derive(s) offices.' 250. finding inconsistent country, '(c)ommon sense coincide established branch 20 indicated 978, accordance precedents prior bank-merger Yet issue conflicts case: 21 'In banking, most industries, convenience location effective competition. Individuals corporations typically confer patronage local community; find impractical conduct distance. inconvenience localizes effectively high transportation costs industries.' 358, 1738 (footnote citations omitted). recognition character great majority activities, drawn narrowly encompass 'the immediate.' 357, 1738. delineated way takes nature 'must charted careful selection seller operates, purchaser practicably (alternatives) ..' 359, 1739 (citations, internal quotations, italics Because scale vary, workable compromise struck 'to delineate neither very practical 361, 1740.7 23 determine approach denoted above FNH, unusual history expansion, rather than acquisition geographically stable task important, respective determines avenues entry theoretically open piercing vice versa. 24 unaware difficulty assignment confronting An element 'fuzziness seem inherent attempt geographical market.' 360 37, 1740. especially taxing here fragmented distribution CNB. Apparently branching created checkerboard 'open' 'closed' towns, 1, expanded past manner produced readily definable, completely covered around home offices. There is, gap consisting four offices, That excluded consideration remand. 25 responsibility imposed ameliorated considerations. First, subject Government. notes 'metes bounds,' citing Pabst Brewing 546, 549, 1665, 1667, 765 extent means not—indeed cannot—be scientific precision, accurate. role come forward delineating rough approximation mandated Second, affirm rely, more, Areas (SMSA's) 249—250, 281—282. SMSA's prepared Office Management Budget social integration, principally commuting patterns residents.8 They terms criteria, developed tool analyzing 249. Exclusive reliance lead inaccuracies. noted, 57% originate SMSA. 250, 282. extend outside SMSA relevant, all, best crude indicator. sum, helpful characteristics refined realistic satisfy burden. demonstrate more accurately solely markets, influence, sites maintain offices.9 27 Third, not, it, served highly units, closed bank, seems fair assume beyond boundaries. 28 evaluate economically legally feasible methods entry, available other. so doing, keep mind outlined 978.10 III 29 conformity argues nonetheless repeats concern expressed 620, 2869, linkage oligopolies 'may' arise across 'may engage' standardized behavior result.11 contends challenged eight 'Thus eliminates felt impact does currently might otherwise enter.'12 30 reject here, did 2869. argument 'a country .'13 foreclosed precedents. 620—622. 2869 2870. Its theory linked appears devoid evidentiary Bancorporation. 'might' enter independently too speculative advancing argument, borders espousing per se long remains branching. address presently operate.14 31 consistent opinion. ordered. 33 Judgment 34 WHITE, whom DOUGLAS, BRENNAN, MARSHALL join, concurring dissenting part. 35 N Dec. Immigration Nationality Decisions agree Part opinion, dissent dealing 36 holds bank,' statement rejects proposition, accepted below,* analyzed adjacent however defined. 37 certainly nothing requires result. test effects merger. Section speaks lessening (emphasis added), acknowledges 621 20, (1966), 'held three actually products—a single multi-state area, Nation whole.' chosen needs sellers operate, 357—359, (1963), result affect various read assumed capability interest improper oppose merger, since entered describes possibility dual 'too speculative.' Ante, 673. What entirely competitor. obvious, while and/or environs competition, prove competitor respect It, therefore, follows considered elimination lessens deconcentration or, 'wings theory,' affects present Since professes leave preclude Bridgport many oligopolies. assumes Country market; 39 understand once decided grographic theory' enunicated Falstaff Corp., 410 526, 93 1096, 475 (1973), now matters, adhere my views stated Under cantaining main office another (the 'home protection' provision). Conn.Gen.Stat.Rev. 36—59 (1972). Towns contain referred remaining 'open towns.' term 'town refers political subdivision somewhat counties States. denote cities congruent located. 169 provision reflecting 36—59(4). 80 8, proscribes consolidation: 'whose substantially lessen tend monopoly, restraint unless anti-competitive transaction clearly outweighed public meeting community served.' 64 1125, 18, comparison provides part: 'No corporation engaged shall acquire, directly indirectly, stock capital coporation jurisdiction Federal Trade Commission acquire assets monopoly.' identified offered time put context, 'ostrich-like,' 254, types vigorous Cf. (1970). submarkets, inquiry, clear. App. 1793. 1795. provisions later December 31, 1975, enactment certain federal legislation specified events trigger date. reaffirmed 362—365, 2042—2044. 1435—1437. agencies bank's derives 75% service-area concept considerably useful SMSA's, 619, affirmed Spokane affirmation insulated comparatively Western States, contains target draws 90% note clear appraisal issue, despite country. court's 'toehold' acquisitions refer areas, 265, heading 'potential speak 286—287. clarify doctrine, unable error denoting 283, ignored. Brief 34. added). 31. assuming, arguendo, violated met 'convenience needs' 1828(c)(5)(B). 288. defense controlling, applied judging status 183—184, 890, 369—370, 1745. One principal witnesses Dr. Peck, removal competitor, CNB,

Classification Label: 7