United States v. Philadelphia Nat'l Bank
374 U.S. 321 (1963)

Annotate this Case

U.S. Supreme Court

United States v. Philadelphia Nat'l Bank, 374 U.S. 321 (1963)

United States v. Philadelphia National Bank

No. 83

Argued February 20-21, 1963

Decided June 17, 1963

374 U.S. 321




Appellees, a national bank and a state bank, are the second and third largest of the 42 commercial banks in the metropolitan area consisting of Philadelphia and its three contiguous counties, and they have branches throughout that area. Appellees' boards of directors approved an agreement for their consolidation, under which the national bank's stockholders would retain their stock certificates, which would represent shares in the consolidated bank, while the state bank's stockholders would surrender their shares in exchange for shares in the consolidated bank. After obtaining reports, as required by the Bank Merger Act of 1960, from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Attorney General, all of whom advised that the proposed merger would substantially lessen competition in the area, the Comptroller of the Currency approved it. The United States sued to enjoin consummation of the proposed consolidation on the ground, inter alia, that it would violate § 7 of the Clayton Act.

Held: the proposed consolidation of appellee banks is forbidden by § 7 of the Clayton Act, and it must be enjoined. Pp. 323-372.

1. By the amendments to § 7 of the Clayton Act enacted in 1950, Congress intended to close a loophole in the original section by broadening its scope so as to cover the entire range of corporate amalgamations, from pure stock acquisitions to pure acquisitions of assets, and it did not intend to exclude bank mergers. Pp. 374 U. S. 335-349.

2. The Bank Merger Act of 1960, by directing the banking agencies to consider competitive factors before approving mergers, did not immunize mergers approved by them from operation of the federal antitrust laws; and the doctrine of primary jurisdiction is not applicable here. California v. Federal Power Commission,369 U. S. 482. Pp. 374 U. S. 350-355.

3. The proposed consolidation of appellee banks would violate § 7 of the Clayton Act, and it must be enjoined. Pp. 374 U. S. 355-372.

Page 374 U. S. 322

(a) The "line of commerce" here involved is commercial banking. Pp. 374 U. S. 355-357.

(b) The "section of the country" which is relevant here is the metropolitan area consisting of Philadelphia and its three contiguous counties. Pp. 374 U. S. 357-362.

(c) The consolidated bank would control such an undue percentage share of the relevant market (at least 30%) and the consolidation would result in such a significant increase in the concentration of commercial banking facilities in the area (33%) that the result would be inherently likely to lessen competition substantially, and there is no evidence in the record to show that it would not do so. Pp. 374 U. S. 362-367.

(d) The facts that commercial banking is subject to a high degree of governmental regulation and that it deals with the intangibles of credit and services, rather than in the manufacture or sale of tangible commodities, do not immunize it from the anticompetitive effects of undue concentration. Pp. 374 U. S. 368-370.

(e) This proposed consolidation cannot be justified on the theory that only through mergers can banks follow their customers to be suburbs and retain their business, since this can be accomplished by establishing new branches in the suburbs. P. 374 U. S. 370.

(f) This proposed consolidation cannot be justified on the ground that the increased lending limit would enable the consolidated bank to compete with the large out-of-state banks, particularly the New York banks, for very large loans. Pp. 374 U. S. 370-371.

(g) This proposed consolidation cannot be justified on the ground that Philadelphia needs a bank larger than it now has in order to bring business to the area and stimulate its economic development. P. 374 U. S. 371.

(h) This Court rejects appellees' pervasive suggestion that application of the procompetitive policy of § 7 to the banking industry will have dire, although unspecified, consequences for the national economy. Pp. 374 U. S. 371-372.

201 F.Supp. 348, reversed.

Page 374 U. S. 323

MR. JUSTICE BRENNAN delivered the opinion of the Court.

The United States, appellant here, brought this civil action in the United States District Court for the Eastern District of Pennsylvania under § 4 of the Sherman Act, 15 U.S.C. § 4, and § 15 of the Clayton Act, 15 U.S.C. § 25, to enjoin a proposed merger of The Philadelphia National Bank (PNB) and Girard Trust Corn Exchange Bank (Girard), appellees here. The complaint charged violations of § 1 of the Sherman Act, 15 U.S.C. § 1, and § 7 of the Clayton Act, 15 U.S.C. § 18. [Footnote 1] From a judgment for appellees after trial, see 201 F.Supp. 348, the United States appealed to this Court under § 2 of the Expediting Act, 15 U.S.C. § 29. Probable jurisdiction was noted. 369 U.S. 883. We reverse the judgment of the District Court. We hold that the merger of appellees is forbidden by § 7 of the

Page 374 U. S. 324

Clayton Act and so must be enjoined; we need not, and therefore do not, reach the further question of alleged violation of § 1 of the Sherman Act.



A. The Background: Commercial Banking in the United States

Because this is the first case which has required this Court to consider the application of the antitrust laws to the commercial banking industry, and because aspects of the industry and of the degree of governmental regulation of it will recur throughout our discussion, we deem it appropriate to begin with a brief background description. [Footnote 2]

Page 374 U. S. 325

Commercial banking in this country is primarily unit banking. That is, control of commercial banking is diffused throughout a very large number of independent, local banks -- 13,460 of them in 1960 -- rather than concentrated in a handful of nationwide banks, as, for example, in England and Germany. There are, to be sure, in addition to the independent banks, some 10,000 branch banks; but branching, which is controlled largely by state law -- and prohibited altogether by some States -- enables a bank to extend itself only to state lines, and often not that far. [Footnote 3] It is also the case, of course, that many banks place loans and solicit deposits outside their home area. But, with these qualifications, it remains true that ours is essentially a decentralized system of community banks. Recent years, however, have witnessed a definite trend toward concentration. Thus, during the decade ending in 1960, the number of commercial banks in the United

Page 374 U. S. 326

States declined by 714, despite the chartering of 887 new banks and a very substantial increase in the Nation's credit needs during the period. Of the 1,601 independent banks which thus disappeared, 1,503, with combined total resources of well over $25,000,000,000, disappeared as the result of mergers.

Commercial banks are unique among financial institutions in that they alone are permitted by law to accept demand deposits. This distinctive power gives commercial banking a key role in the national economy. For banks do not merely deal in, but are actually a source of, money and credit; when a bank makes a loan by crediting the borrower's demand deposit account, it augments the Nation's credit supply. [Footnote 4] Furthermore, the power to accept demand deposits makes banks the intermediaries in most financial transactions (since transfers of substantial moneys are almost always by check, rather than by cash) and, concomitantly, the repositories of very substantial individual and corporate funds. The banks' use of these funds is conditioned by the fact that their working capital consists very largely of demand deposits, which makes liquidity the guiding principle of bank lending and investing policies; thus it is that banks are the chief source of the country's short-term business credit.

Banking operations are varied and complex; "commercial banking" describes a congeries of services and credit devices. [Footnote 5] But among them the creation of additional

Page 374 U. S. 327

money and credit, the management of the checking account system, and the furnishing of short-term business loans would appear to be the most important. For the proper discharge of these functions is indispensable to a healthy national economy, as the role of bank failures in depression periods attests. It is therefore not surprising that commercial banking in the United States is subject to a variety of governmental controls, state and federal. Federal regulation is the more extensive, and our focus will be upon it. It extends not only to the national banks, i.e., banks chartered under federal law and supervised by the Comptroller of the Currency, see 12 U.S.C. § 21 et seq. For many state banks, see 12 U.S.C. § 321, as well as virtually all the national banks, 12 U.S.C. § 222, are members of the Federal Reserve System (FRS), and more than 95% of all banks, see 12 U.S.C. § 1815, are insured by the Federal Deposit Insurance Corporation (FDIC). State member and nonmember insured banks are subject to a federal regulatory scheme almost as elaborate as that which governs the national banks.

The governmental controls of American banking are manifold. First, the Federal Reserve System, through its open-market operations, see 12 U.S.C. §§ 263(c), 353-359, control of the rediscount rate, see 12 U.S.C. § 357, and modifications of reserve requirements, see 12 U.S.C.

Page 374 U. S. 328

§§ 462, 462b, regulates the supply of money and credit in the economy, and thereby indirectly regulates the interest rates of bank loans. This is not, however, rate regulation. The Reserve System's activities are only designed to influence the prime, i.e., minimum, bank interest rate. There is no federal control of the maximum, although all banks, state and national, are subject to state usury laws where applicable. See 12 U.S.C. § 85. In the range between the maximum fixed by state usury laws and the practical minimum set by federal fiscal policies (there is no law against undercutting the prime rate, but bankers seldom do), bankers are free to price their loans as they choose. Moreover, charges for other banking services, such as service charges for checking privileges, are free of governmental regulation, state or federal.

Entry, branching, and acquisitions are covered by a network of state and federal statutes. A charter for a new bank, state or national, will not be granted unless the invested capital and management of the applicant, and its prospects for doing sufficient business to operate at a reasonable profit, give adequate protection against undue competition and possible failure. See, e.g., 12 U.S.C. §§ 26, 27, 51; 12 CFR § 4.1(b); Pa.Stat.Ann., Tit. 7, § 819-306. Failure to meet these standards may cause the FDIC to refuse an application for insurance, 12 U.S.C. §§ 1815, 1816, and may cause the FDIC, Federal Reserve Board (FRB), and Comptroller to refuse permission to branch to insured, member, and national banks, respectively. 12 U.S.C. §§ 36, 321, 1828(d). Permission to merge, consolidate, acquire assets, or assume liabilities may be refused by the agencies on the same grounds. 12 U.S.C. (1958 ed., Supp. IV) § 1828(c), note 8infra. Furthermore, national banks appear to be subject to state geographical limitations on branching. See 12 U.S.C. § 36(c).

Page 374 U. S. 329

Banks are also subject to a number of specific provisions aimed at ensuring sound banking practices. For example, member banks of the Federal Reserve System may not pay interest on demand deposits, 12 U.S.C. § 371a, may not invest in common stocks or hold for their own account investment securities of any one obligor in excess of 10% of the bank's unimpaired capital and surplus, see 12 U.S.C. §§ 24 Seventh, 335, and may not pay interest on time or savings deposits above the rate fixed by the FRB, 12 U.S.C. § 371b. The payment of interest on deposits by nonmember insured banks is also federally regulated. 12 U.S.C. (1958 ed., Supp. IV) § 1828(g); 12 CFR, 1962 Supp., Part 329. In the case of national banks, the 10% limit on the obligations of a single obligor includes loans as well as investment securities. See 12 U.S.C. § 84. Pennsylvania imposes the same limitation upon banks chartered under its laws, such as Girard. Pa.Stat.Ann. (1961 Supp.), Tit. 7, § 819-1006.

But perhaps the most effective weapon of federal regulation of banking is the broad visitorial power of federal bank examiners. Whenever the agencies deem it necessary, they may order "a thorough examination of all the affairs of the bank," whether it be a member of the FRS or a nonmember insured bank. 12 U.S.C. §§ 325, 481, 483, 1820(b); 12 CFR § 4.2. Such examinations are frequent and intensive. In addition, the banks are required to furnish detailed periodic reports of their operations to the supervisory agencies. 12 U.S.C. §§ 161, 324, 1820(e). In this way, the agencies maintain virtually a day-to-day surveillance of the American banking system. And should they discover unsound banking practices, they are equipped with a formidable array of sanctions. If, in the judgment of the FRB, a member bank is making "undue use of bank credit," the Board may suspend the bank from the use of the credit facilities of the FRS. 12 U.S.C. § 301. The FDIC has an even more formidable

Page 374 U. S. 330

power. If it finds "unsafe or unsound practices" in the conduct of the business of any insured bank, it may terminate the bank's insured status. 12 U.S.C. § 1818(a). Such involuntary termination severs the bank's membership in the FRS, if it is a state bank, and throws it into receivership if it is a national bank. 12 U.S.C. § 1818(b). Lesser, but nevertheless drastic, sanctions include publication of the results of bank examinations. 12 U.S.C. §§ 481, 1828(f). As a result of the existence of this panoply of sanctions, recommendations by the agencies concerning banking practices tend to be followed by bankers without the necessity of formal compliance proceedings. 1 Davis, Administrative Law (1958), § 4.04.

Federal supervision of banking has been called

"[p]robably the outstanding example in the federal government of regulation of an entire industry through methods of supervision. . . . The system may be one of the most successful [systems of economic regulation,] if not the most successful."

Id., § 4.04, at 247. To the efficacy of this system we may owe, in part, the virtual disappearance of bank failures from the American economic scene. [Footnote 6]

B. The Proposed Merger of PNB and Girard

The Philadelphia National Bank and Girard Trust Corn Exchange Bank are, respectively, the second and third largest of the 42 commercial banks with head offices in the Philadelphia metropolitan area, which consists of the City of Philadelphia and its three contiguous counties in Pennsylvania. The home county of both banks is the

Page 374 U. S. 331

city itself; Pennsylvania law, however, permits branching into the counties contiguous to the home county, Pa.Stat.Ann. (1961 Supp.), Tit. 7, § 819-204.1, and both banks have offices throughout the four-county area. PNB, a national bank, has assets of over $1,000,000,000, making it (as of 1959) the twenty-first largest bank in the Nation. Girard, a state bank, is a member of the FRS and is insured by the FDIC; it has assets of about $750,000,000. Were the proposed merger to be consummated, the resulting bank would be the largest in the four-county area, with (approximately) 36% of the area banks' total assets, 36% of deposits, and 34% of net loans. It and the second largest (First Pennsylvania Bank and Trust Company, now the largest) would have between them 59% of the total assets, 58% of deposits, and 58% of the net loans, while, after the merger, the four largest banks in the area would have 78% of total assets, 77% of deposits, and 78% of net loans.

The present size of both PNB and Girard is in part the result of mergers. Indeed, the trend toward concentration is noticeable in the Philadelphia area generally, in which the number of commercial banks has declined from 108 in 1947 to the present 42. Since 1950, PNB has acquired nine formerly independent banks, and Girard six; and these acquisitions have accounted for 59% and 85% of the respective banks' asset growth during the period, 63% and 91% of their deposit growth, and 12% and 37% of their loan growth. During this period, the seven largest banks in the area increased their combined share of the area's total commercial bank resources from about 61% to about 90%.

In November, 1960, the boards of directors of the two banks approved a proposed agreement for their consolidation under the PNB charter. By the terms of the agreement, PNB's stockholders were to retain their share certificates, which would be deemed to represent an equal

Page 374 U. S. 332

number of shares in the consolidated bank, while Girard's stockholders would surrender their shares in exchange for shares in the consolidated bank, receiving 1.2875 such shares for each Girard share. Such a consolidation is authorized, subject to the approval of the Comptroller of the Currency, by 12 U.S.C. (1958 ed., Supp. IV) § 215. [Footnote 7] But under the Bank Merger Act of 1960, 12 U.S.C. (1963 ed., Supp. IV) § 1828(c), the Comptroller may not give his approval until he has received reports from the other two banking agencies and the Attorney General respecting the probable effects of the proposed transaction on competition. [Footnote 8] All three reports advised that the proposed

Page 374 U. S. 333

merger would have substantial anticompetitive effects in the Philadelphia metropolitan area. However, on February 24, 1961, the Comptroller approved the merger. No opinion was rendered at that time. But, as required by § 1828(c), the Comptroller explained the basis for his decision to approve the merger in a statement to be included in his annual report to Congress. As to effect upon competition, he reasoned that,

"[s]ince there will remain an adequate number of alternative sources of banking service in Philadelphia, and in view of the beneficial effects of this consolidation upon international and national competition, it was concluded that the over-all effect upon competition would not be unfavorable."

He also stated that the consolidated bank

"would be far better able to serve the convenience and needs of its community by being of material assistance to its city and state in their efforts to attract new industry and to retain existing industry."

The day after the Comptroller approved the

Page 374 U. S. 334

merger, the United States commenced the present action. No steps have been taken to consummate the merger pending the outcome of this litigation.

C. The Trial and the District Court's Decision

The Government's case in the District Court relied chiefly on statistical evidence bearing upon market structure and on testimony by economists and bankers to the effect that, notwithstanding the intensive governmental regulation of banking, there was a substantial area for the free play of competitive forces; that concentration of commercial banking, which the proposed merger would increase, was inimical to that free play; that the principal anticompetitive effect of the merger would be felt in the area in which the banks had their offices, thus making the four-county metropolitan area the relevant geographical market; and that commercial banking was the relevant product market. The defendants, in addition to offering contrary evidence on these points, attempted to show business justifications for the merger. They conceded that both banks were economically strong and had sound management, but offered the testimony of bankers to show that the resulting bank, with its greater prestige and increased lending limit, [Footnote 9] would be better able to compete with large out-of-state (particularly New York) banks, would attract new business to Philadelphia, and in general would promote the economic development of the metropolitan area. [Footnote 10]

Page 374 U. S. 335

Upon this record, the District Court held that: (1) the passage of the Bank Merger Act of 1960 did not repeal by implication the antitrust laws insofar as they may apply to bank mergers; (2) § 7 of the Clayton Act is inapplicable to bank mergers, because banks are not corporations "subject to the jurisdiction of the Federal Trade Commission"; (3) but, assuming that § 7 is applicable, the four-county Philadelphia metropolitan area is not the relevant geographical market, because PNB and Girard actively compete with other banks for bank business throughout the greater part of the northeastern United States; (4) but even assuming that § 7 is applicable, and that the four-county area is the relevant market, there is no reasonable probability that competition among commercial banks in the area will be substantially lessened as the result of the merger; (5) since the merger does not violate § 7 of the Clayton Act, a fortiori it does not violate § 1 of the Sherman Act; (6) the merger will benefit the Philadelphia metropolitan area economically. The District Court also ruled that, for the purposes of § 7, commercial banking is a line of commerce; the appellees do not contest this ruling.




A. The Original Section and the 1950 Amendment

By its terms, the present § 7 reaches acquisitions of corporate stock or share capital by any corporation engaged

Page 374 U. S. 336

in commerce, but it reaches acquisitions of corporate assets only by corporations "subject to the jurisdiction of the Federal Trade Commission." The FTC, under § 5 of the Federal Trade Commission Act, has no jurisdiction over banks. 15 U.S.C. § 45(a)(6). [Footnote 11] Therefore, if the proposed merger be deemed an assets acquisition, it is not within § 7. [Footnote 12] Appellant argues vigorously that a merger is crucially different from a pure assets acquisition, [Footnote 13] and

Page 374 U. S. 337

appellees argue with equal vigor that it is crucially different from a pure stock acquisition. [Footnote 14] Both positions, we think, have merit; a merger fits neither category neatly. Since the literal terms of § 7 thus do not dispose of our question, we must determine whether a congressional design to embrace bank mergers is revealed in the history of the statute. The question appears to be one of first impression; we have been directed to no previous case in which a merger or consolidation was challenged under § 7 of the Clayton Act, as amended, where the acquiring corporation was not subject to the FTC's jurisdiction.

When it was first enacted in 1914, § 7 referred only to corporate acquisitions of stock and share capital; it was silent as to assets acquisitions and as to mergers and consolidations.

Page 374 U. S. 338

Act of October 15, 1914, c. 323, § 7, 38 Stat. 731-732, note 18infra. It is true that the omission may not have been an oversight. Congress' principal concern was with the activities of holding companies, and specifically with the practice whereby corporations secretly acquired control of their competitors by purchasing the stock of those companies. Although assets acquisitions and mergers were known forms of corporate amalgamation at the time, their no less dangerously anticompetitive effects may not have been fully apparent to the Congress. [Footnote 15] Still, the statutory language, read in the light of the overriding congressional purpose to control corporate concentrations tending to monopoly, lent itself to a construction whereby § 7 would have reached at least mergers and consolidations. It would hardly have done violence to the language so to have interpreted the vague term "share capital," see 30 Geo.Wash.L.Rev. 1024, 1027-1028 (1962), or to have adopted the view that:

"where the assets are exchanged for the stock of the purchasing company, assuming that the two companies were previously in competition, it is apparent that the seller has acquired stock in a competing company . . . [and] therefore that, in effecting the merger, section 7 was violated, and hence the distribution of the stock received by the selling company to its shareholders and its subsequent dissolution are no bar to proceedings by the government to set aside the purchase."

Handler, Industrial Mergers and the Anti-Trust Laws, 32 Col.L.Rev. 179, 266 (1932). [Footnote 16]

But the courts found mergers to be beyond the reach of § 7, even when the merger technique had supplanted

Page 374 U. S. 339

stock acquisitions as the prevalent mode of corporate amalgamation. United States v. Celanese Corp. of America, 91 F.Supp. 14 (D.C.S.D.N.Y.1950); see Thatcher Mfg. Co. v. Federal Trade Comm'n and Swift & Co. v. Federal Trade Comm'n, decided together with Federal Trade Comm'n v. Western Meat Co.,272 U. S. 554; Arrow-Hart & Hegeman Elec. Co. v. Federal Trade Comm'n,291 U. S. 587. [Footnote 17] As a result, § 7 became largely

Page 374 U. S. 340

a dead letter. Comment, 68 Yale L.J. 1627, 1629-1630 (1959); see Federal Trade Commission, The Merger Movement: A Summary Report (1948), 1, 3-6; Henderson, The Federal Trade Commission (1924), 40. Meanwhile, this Court's decision in United States v. Columbia Steel Co.,334 U. S. 495, stirred concern whether the Sherman Act alone was a check against corporate acquisitions. Note, 52 Col.L.Rev. 766, 768 (1952).

It was against this background that Congress in 1950 amended § 7 to include an assets acquisition provision. Act of December 29, 1950 (Celler-Kefauver Antimerger Act), c. 1184, 64 Stat. 1125-1126, 15 U.S.C. § 18. [Footnote 18]

Page 374 U. S. 341

The legislative history is silent on the specific questions why the amendment made no explicit reference to mergers, why assets acquisitions by corporations not subject to FTC jurisdiction were not included, and what these omissions signify. Nevertheless, the basic congressional design clearly emerges and from that design the answers to these questions may be inferred. Congress primarily sought to bring mergers within § 7, and thereby close what it regarded as a loophole in the section. [Footnote 19] But, in addition, it sought to reach transactions such as that involved in Columbia Steel, which was a simple purchase

Page 374 U. S. 342

of assets and not a merger. [Footnote 20] In other words, Congress contemplated that the 1950 amendment would give § 7 a reach which would bring the entire range of corporate amalgamations, from pure stock acquisitions to pure assets acquisitions, within the scope of § 7. Thus, the stock acquisition and assets acquisition provisions, read together, reach mergers, which fit neither category perfectly, but lie somewhere between the two ends of the spectrum. See pp. 374 U. S. 336-337, and notes 1314supra. So construed, the specific exception for acquiring corporations not subject to the FTC's jurisdiction excludes from the coverage of § 7 only assets acquisitions by such corporations when not accomplished by merger.

Page 374 U. S. 343

This construction is supported by a number of specific considerations.

First. Any other construction would be illogical, and disrespectful of the plain congressional purpose in amending § 7, because it would create a large loophole in a statute designed to close a loophole. It is unquestioned that the stock acquisition provision of § 7 embraces every corporation engaged in commerce, including banks. And it is plain that Congress, in amending § 7, considered a distinction for antitrust purposes between acquisition of corporate control by purchase of stock and acquisition by merger unsupportable in reason, and sought to overrule the decisions of this Court which had recognized such a distinction. [Footnote 21] If, therefore, mergers in industries outside

Page 374 U. S. 344

the FTC's jurisdiction were deemed beyond the reach of § 7, the result would be precisely that difference in treatment which Congress rejected. On the other hand, excluding from the section assets acquisitions not by merger in those industries does not appear to create a lacuna of practical importance. [Footnote 22]

Page 374 U. S. 345

Second. The Congress which debated the bill to amend § 7 was fully aware of the important differences between a merger and a pure purchase of assets. For example, Senator Kilgore, remarked:

"When you talk about mergers, you are talking about a stock transaction. . . ."

"* * * *"

". . . [A]ctually what you do is merge the stockholdings of both corporations, and instead of that -- I am thinking in practical terms -- you merge the corporate entities of the two corporations and you get one corporation out of it, and you issue stock in the one corporation in lieu of the stock in the other corporation, whereupon the stock of the corporation which had been merged is canceled by the new corporation, and you have one corporation handling the operation of two. So it really is a stock transaction in the final wind-up, regardless of what you call it. But what I call a purchase of assets is where you purchase physical assets, things upon which you could lay your hand, either in the records or on the ground. . . ."

Hearings before a Subcommittee of

Page 374 U. S. 346

the Senate Committee on the Judiciary on Corporate Mergers and Acquisitions, 81st Cong., 1st and 2d Sess. 176; to the same effect, see, e.g., id. at 100, 139, 320-325.

Plainly, acquisition of "assets," as used in amended § 7, was not meant to be a simple equivalent of acquisition by merger, but was intended rather to ensure against the blunting of the antimerger thrust of the section by evasive transactions such as had rendered the original section ineffectual. Thus, the stock acquisition provision of § 7, though reenacted in haec verba by the 1950 amendment, must be deemed expanded in its new context to include, at the very least, acquisitions by merger or consolidation, transactions which entail a transfer of stock of the parties, while the assets acquisition provision clearly reaches corporate acquisitions involving no such transfer. And seenote 22supra. This seems to be the point of Congressman Patman's remark, typical of many, that:

"What this bill does is to put all corporate mergers on the same footing, whether the result of the acquisitions of stock or the acquisition of physical assets."

Hearings, supra, at 126. To the same effect is the House Report on the bill to amend § 7:

"The bill retains language of the present statute, which is broad enough to prevent evasion of the central purpose. It covers not only purchase of assets or stock but also any other method of acquisition. . . . It forbids not only direct acquisitions, but also indirect acquisitions. . . ."

H.R.Rep.No.1191, 81st Cong., 1st Sess. 8-9.

Third. The legislative history shows that the objective of including the phrase "corporation subject to the jurisdiction of the Federal Trade Commission" in § 7 was not to limit the amalgamations to be covered by the amended statute, but to make explicit the role of the FTC in administering the section. The predominant focus of the hearings,

Page 374 U. S. 347

debates, and committee reports was upon the powers of the FTC. The decisions of this Court which had uncovered the loophole in the original § 7 -- Thatcher, Swift, and Arrow-Hart -- had not rested directly upon the substantive coverage of § 7, but rather upon the limited scope of the FTC's divestiture powers under § 11. Seenote 17supra. There were intimations that the courts' power to enforce § 7 might be far greater. See Thatcher Mfg. Co. v. Federal Trade Comm'n, supra, at 272 U. S. 561; Swift & Co. v. Federal Trade Comm'n, supra, at 272 U. S. 563; Federal Trade Comm'n v. Eastman Kodak Co.,274 U. S. 619, 274 U. S. 624; Arrow-Hart & Hegeman Elec. Co. v. Federal Trade Comm'n, supra, at 291 U. S. 598-599; Irvine, The Uncertainties of Section 7 of the Clayton Act, 14 Cornell L.Q. 28 (1928). Thus, the loophole was sometimes viewed as primarily a gap in the FTC's jurisdiction. [Footnote 23] Furthermore, although the Clayton Act has always provided for dual enforcement by court and agency, see 15 U.S.C. § 25; United States v. W. T. Grant Co.,345 U. S. 629; United States Alkali Export Assn. v. United States,325 U. S. 196, 325 U. S. 208, prior to the 1950 amendment, enforcement of § 7 was left largely to the FTC. Martin, Mergers and the Clayton Act (1959), 205, 219; Montague, The Celler Anti-Merger Act: An Administrative Problem in an Economic Crisis, 37 A.B.A.J. 253

Page 374 U. S. 348

(1951). And the impetus to amend § 7 came in large part from the FTC. See, e.g., Martin, supra, 187-194; Federal Trade Commission, Annual Reports, 1928, pp. 18-19; 1940, pp. 12-13; 1948, pp. 11-22; The Merger Movement: A Summary Report (1948). Congress in 1950 clearly intended to remove all question concerning the FTC's remedial power over corporate acquisitions, and therefore explicitly enlarged the FTC's jurisdiction. Congress' choice of this means of underscoring the FTC's role in enforcing § 7 provides no basis for a construction which would undercut the dominant congressional purpose of eliminating the difference in treatment accorded stock acquisitions and mergers by the original § 7 as construed.

Fourth. It is settled law that "[i]mmunity from the antitrust laws is not lightly implied." California v. Federal Power Comm'n,369 U. S. 482, 369 U. S. 485. Cf. United States v. Borden Co.,308 U. S. 188, 308 U. S. 198-199; United States v. Southern Pac. Co.,259 U. S. 214, 259 U. S. 239-240. This canon of construction, which reflects the felt indispensable role of antitrust policy in the maintenance of a free economy, is controlling here. For there is no indication in the legislative history to the 1950 amendment of § 7 that Congress wished to confer a special dispensation upon the banking industry; if Congress had so wished, moreover, surely it would have exempted the industry from the stock acquisition as well as the assets acquisition provision.

Of course, our construction of the amended § 7 is not foreclosed because, after the passage of the amendment, some members of Congress, and for a time the Justice Department, voiced the view that bank mergers were still beyond the reach of the section. [Footnote 24] "[T]he views of a subsequent

Page 374 U. S. 349

Congress form a hazardous basis for inferring the intent of an earlier one." United States v. Price,361 U. S. 304, 361 U. S. 313; see Rainwater v. United States,356 U. S. 590, 356 U. S. 593; United States v. United Mine Workers,330 U. S. 258, 330 U. S. 282; cf. United States v. E. I. Du Pont De Nemours & Co.,353 U. S. 586, 353 U. S. 590. This holds true even though misunderstanding of the scope of § 7 may have played some part in the passage of the Bank Merger Act of 1960. [Footnote 25] There is a question, to which we shall shortly turn, whether there exists such inconsistency between the Bank Merger Act and § 7, as we now construe it, as to require a holding that § 7 must be deemed repealed pro tanto; but that is a different question from whether misunderstanding of the scope of § 7 is relevant to our task of defining what scope Congress gave the section in 1950. When Congress enacted the Bank Merger Act, the applicability of § 7 to bank mergers was still to be authoritatively determined; it was a subject of speculation. Thus, this is not a case in which our

"earlier decisions are part of the arch on which the new structure rests, [and] we [must] refrain from disturbing them lest we change the design that Congress fashioned."

State Board of Ins. v. Todd Shipyards Corp.,370 U. S. 451, 370 U. S. 458. Cf.note 17supra. The design fashioned in the Bank Merger Act was predicated upon uncertainty as to the scope of § 7, and we do no violence to that design by dispelling the uncertainty.

Page 374 U. S. 350

B. The Effect of the Bank Merger Act of 1960

Appellees contended below that the Bank Merger Act, by directing the banking agencies to consider competitive factors before approving mergers, 12 U.S.C. (1958 ed., Supp. IV) § 1828(c), note 8supra, immunizes approved mergers from challenge under the federal antitrust laws. [Footnote 26] We think the District Court was correct in rejecting this contention. No express immunity is conferred by the Act. [Footnote 27] Repeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, [Footnote 28] and

Page 374 U. S. 351

have only been found in cases of plain repugnancy between the antitrust and regulatory provisions. [Footnote 29] Two recent cases, Pan American World Airways v. United States,371 U. S. 296, and California v. Federal Power Comm'n,369 U. S. 482, illustrate this principle. In Pan American, the Court held that because the Civil Aeronautics Board had been given broad powers to enforce the competitive standard clearly delineated by the Civil Aeronautics Act, and to immunize a variety of transactions from the operation of the antitrust laws, the Sherman Act could not be applied to facts composing the precise ingredients of a case subject to the Board's broad regulatory and remedial powers; in contrast, the banking agencies have authority neither to enforce the antitrust laws against mergers, cf.note 22supra, nor to grant immunity from those laws.

In the California case, on the other hand, the Court held that the FPC's approval of a merger did not confer immunity from § 7 of the Clayton Act, even though, as in the instant case, the agency had taken the competitive factor into account in passing upon the merger application. See 369 U.S. at 369 U. S. 484-485, 369 U. S. 487-488. We think California is controlling here. Although the Comptroller was required to consider effect upon competition in passing upon appellees' merger application, he was not required to give this factor any particular weight; he was not even required to (and did not) hold a hearing before approving the application; and there is no specific provision for judicial review of his decision. [Footnote 30] Plainly, the

Page 374 U. S. 352

range and scope of administrative powers under the Bank Merger Act bear little resemblance to those involved in Pan American.

Nor did Congress, in passing the Bank Merger Act, embrace the view that federal regulation of banking is so comprehensive that enforcement of the antitrust laws would be either unnecessary, in light of the completeness of the regulatory structure, or disruptive of that structure. On the contrary, the legislative history of the Act seems clearly to refute any suggestion that applicability of the antitrust laws was to be affected. Both the House and Senate Committee Reports stated that the Act would not affect in any way the applicability of the antitrust laws to bank acquisitions. H.R.Rep. No. 1416, 86th Cong., 2d Sess. 9; S.Rep. No. 196, 86th Cong., 1st Sess. 3. See also, e.g., 105 Cong.Rec. 8131 (remarks of Senator Rebertson, the Act's sponsor). Moreover, bank regulation is in most respects less complete than public utility regulation, to which interstate rail and air carriers, among others, are subject. Rate regulation in the banking industry is limited and largely indirect, see p. 374 U. S. 328, supra; banks are under no duty not to discriminate in their services; and though the location of bank offices is regulated, banks may do business -- place loans and solicit deposits -- where they please. The fact that the banking agencies maintain a close surveillance of the industry with a view toward preventing unsound practices that might impair liquidity or lead to insolvency does not make federal banking regulation all-pervasive, although it does minimize the hazards of intense competition. Indeed, that there are so many direct public controls over unsound competitive practices in the industry refutes the argument that private controls of competition are necessary in the public interest and ought therefore to be immune from scrutiny under the antitrust laws. Cf. Kaysen and Turner, Antitrust Policy (1959), 206.

Page 374 U. S. 353

We note, finally, that the doctrine of "primary jurisdiction" is not applicable here. That doctrine requires judicial abstention in cases where protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme. See Far East Conference v. United States,342 U. S. 570; Great Northern R. Co. v. Merchants Elevator Co.,259 U. S. 285; Schwartz, Legal Restriction of Competition in the Regulated Industries: An Abdication of Judicial Responsibility, 67 Harv.L.Rev. 436, 464 (1954). [Footnote 31] Court jurisdiction is not thereby ousted, but only postponed. See General Am. Tank Car Corp. v. El Dorado Terminal Co.,308 U. S. 422, 308 U. S. 433; Federal Maritime Bd. v. Isbrandtsen Co.,356 U. S. 481, 356 U. S. 498-499; 3 Davis, Administrative Law (1958), 1-55. Thus, even if we were to assume the applicability of the doctrine to merger application proceedings before the banking agencies, [Footnote 32] the present action would not be barred, for the agency proceeding was completed before the antitrust action was commenced. Cf. United States v. Western Pac. R. Co.,352 U. S. 59, 352 U. S. 69; Retail Clerks Int'l Assn. v. Schermerhorn,373 U. S. 746, 373 U. S. 756. We recognize that the practical effect of applying the doctrine of primary

Page 374 U. S. 354

jurisdiction has sometimes been to channel judicial enforcement of antitrust policy into appellate review of the agency's decision, see Federal Maritime Bd. v. Isbrandtsen Co., supra; cf. D. L. Piazza Co. v. West Coast Line, Inc., 210 F.2d 947 (C.A.2d Cir., 1954), or even to preclude such enforcement entirely if the agency has the power to approve the challenged activities, see United States Nav. Co. v. Cunard S.S. Co.,284 U. S. 474; cf. United States v. Railway Express Agency, 101 F.Supp. 1008 (D.C.D.Del.1951); but see Federal Maritime Bd. v. Isbrandtsen Co., supra. But here there may be no power of judicial review of the administrative decision approving the merger, and such approval does not, in any event, confer immunity from the antitrust laws, see pp. 374 U. S. 350-352, supra. Furthermore, the considerations that militate against finding a repeal of the antitrust laws by implication from the existence of a regulatory scheme also argue persuasively against attenuating, by postponing, the courts' jurisdiction to enforce those laws.

It should be unnecessary to add that, in holding as we do that the Bank Merger Act of 1960 does not preclude application of § 7 of the Clayton Act to bank mergers, we deprive the later statute of none of its intended force. Congress plainly did not intend the 1960 Act to extinguish other sources of federal restraint of bank acquisitions having anticompetitive effects. For example, Congress certainly knew that bank mergers would continue subject to the Sherman Act, see p. 374 U. S. 352, supra, as well as that pure stock acquisitions by banks would continue subject to § 7 of the Clayton Act. If, in addition, bank mergers are subject to § 7, we do not see how the objectives of the 1960 Act are thereby thwarted. It is not as if the Clayton and Sherman Acts embodied approaches to antitrust policy inconsistent with or unrelated to each other. The Sherman Act, of course, forbids mergers effecting an unreasonable restraint of trade. See, e.g., 193 U. S. S. 355

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