United States v. First City Nat'l Bank of Houston
386 U.S. 361 (1967)

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U.S. Supreme Court

United States v. First City Nat'l Bank of Houston, 386 U.S. 361 (1967)

United States v. First City National Bank of Houston

No. 914

Argued February 221, 1967

Decided March 27, 1967*

386 U.S. 361

Syllabus

Application for approval of two bank mergers was made with the Comptroller of the Currency by two banks in Houston and two banks in Philadelphia. The Comptroller, applying the standard of the Bank Merger Act of 1966, in 12 U.S.C. § 1828(c)(5)(b) (1964 ed., Supp. II), found that the anticompetitive effect of each merger was

"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."

He thereupon approved the mergers notwithstanding the adverse reports made to him by the Attorney General and Federal Reserve System Board of Governors that the overall effects of the mergers would be seriously anticompetitive. The United States, acting under § 7 of the Clayton Act and without reference to the 1966 Act, thereafter brought these civil actions against the banks to prevent the mergers. The Comptroller intervened and moved to dismiss the complaints as not stating facts sufficient to support a cause of action. The District Courts, holding that the Government had the burden, which it had not satisfied, of showing that the mergers did not come within the exception embraced by § 1828(c)(5)(b), dismissed the complaints and dissolved the statutory stays of the effectiveness of the Comptroller's approvals of the mergers.

Held.

1. Since an action challenging a bank merger lies under the antitrust laws, the Government's failure to base its actions on the Bank Merger Act of 1966 does not constitute a defect in pleading. Pp. 386 U. S. 363-364.

2. The defendant banks, in an action to prevent their mergers as being anticompetitive, have the burden of proving that they come within the exception in the 1966 Act which allows a merger where its adverse effects are outweighed by considerations of community convenience and need. P. 386 U. S. 366.

Page 386 U. S. 362

3. The court, under the 1966 Act, which provides for de novo judicial review of the issues presented, shall make an independent determination of the legality of a bank merger, and not merely review the baking agency's action to determine whether it is supported by substantial evidence. Pp. 366-370.

4. The stays of the effectiveness of the merger should continue pending termination of the antitrust litigation. Pp. 386 U. S. 370-371.

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

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