United States v. Manufacturers Hanover Trust Co.

240 F. Supp. 867, 1965 U.S. Dist. LEXIS 7779, 1965 Trade Cas. (CCH) 71,408
CourtDistrict Court, S.D. New York
DecidedMarch 10, 1965
StatusPublished
Cited by29 cases

This text of 240 F. Supp. 867 (United States v. Manufacturers Hanover Trust Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Manufacturers Hanover Trust Co., 240 F. Supp. 867, 1965 U.S. Dist. LEXIS 7779, 1965 Trade Cas. (CCH) 71,408 (S.D.N.Y. 1965).

Opinion

MacMAHON, District Judge.

The government, claiming violation of Section 7 of the Clayton Act 1 and Section 1 of the Sherman Act, 2 seeks equitable relief undoing a merger of Manufacturers Trust Company and The Hanover Bank which resulted in the creation of defendant, Manufacturers Hanover Trust Company.

The merger has now been in effect for more than three years. It was consummated on September 8, 1961, shortly before this suit was filed, 3 ****following prior *876 approval of the New York Superintendent of Banks, as required by the New York Banking Law, 4 and of the Board of Governors of the Federal Reserve System, as required by the federal Bank Merger Act. 5 Both the state and federal statutes require the respective banking agencies to consider not merely banking factors and the overall public interest before approving a merger but also the effect of the transaction on competition, including any tendency toward monopoly.

Both agencies approved this merger, without adversary hearings, but after consideration of documentary evidence, statistical data, investigation, and, in the case of the Board, the reports of the Attorney General, the Federal Deposit Insurance Corporation (F.D.I.C.), and the Comptroller of the Currency, and interrogation of officers of the merging banks relative to the merger’s competitive effect. The Superintendent concluded, after thorough analysis of relevant data, that the merger “would not result in a concentration of assets beyond limits consistent with effective competition. The proposed merger would not result in such *877 a lessening of competition as to be injurious to the interest of the public, nor in such a lessening of competition as to tend toward monopoly.” The Board, despite objection on antitrust grounds interposed by the Attorney General, concluded, with the concurrence of the Comptroller of the Currency, that the merger would have no adverse competitive effect but “would tend to stimulate competition without significantly affecting the number or competitive strength of alternative sources of banking services.” The F.D.I.C. found the pro and anti competitive effects of the merger so in balance that it based its approval on banking factors and the public interest.

The government makes no claim that the agencies relied on incorrect facts or misapplied the statutory standards under which they operate. It does not seek to review their decisions. Rather, it invokes original jurisdiction of this court under the antitrust laws 6 asking us to destroy a merger which the banking agencies validated. The government contends that the merger is a combination in unreasonable restraint of trade, violative of Section 1 of the Sherman Act, and that its effect “may be substantially to lessen competition or to tend to create a monopoly,” violative of Section 7 of the Clayton Act.

We state at the outset that there is no evidence of predatory conduct, anticom-petitive behavior or motive, conspiracy, price-fixing, or any other intentional injury to competitors or to the public either by the constitutent banks, the resulting bank, or any of its largest competitors. The government asserts, however, that an inference of the proscribed anticompeti-tive effect in commercial banking in the City of New York, the metropolitan area, and the United States is compelled by market structure, specifically, the size of the constitutent banks, the permanent elimination of Hanover as a separate competitor, the resulting bank’s size and its share of the relevant markets, a history of mergers and a trend toward concentration, and the increase in concentration caused and threatened by the merger.

Defendant contends that the facts give rise to no anticompetitive inference in the relevant markets and that the government has failed to prove its case. It argues that the government inflates its relative size by commingling the local and national markets, that mere size is not an offense, that mergers of competitors are not per se unlawful, that the merger has not eliminated significant competition, that the resulting bank does not control an undue share of the relevant markets, that concentration has not been unduly increased, and that customers are well served by numerous, strong and vigorous competitors, both locally and nationally.

JURISDICTION — THE EFFECT OF AGENCY APPROVAL

Defendant, caught in a cross fire, originally challenged the court’s jurisdiction over the subject matter. A similar argument was made unsuccessfully in the district court, but abandoned on appeal, in United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 350 n. 26, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963). As a result, it was briefed but not argued on appeal by the government, and neither briefed nor argued by the banks. Nevertheless, it was considered but rejected by the Supreme Court. We are bound, therefore, to reject it here, whatever its merit.

*878 Defendant does not press the point. 7 Instead, it urges that we should regard the opinions of the impartial banking agencies as extremely persuasive evidence. It points to the government’s failure to produce any material evidence here which was not before, or within the knowledge of, the banking agencies, to the similarity of the statutory standards governing the agencies’ consideration of the competitive factor to those of the antitrust laws, and to the agencies’ application of antitrust principles in their analyses of the competitive effect of the merger.

The government, however, relying on Philadelphia, contends that we must judge the validity of the merger under a different standard from that governing the banking agencies and are bound, therefore, to assess its competitive effect on the basis of established antitrust principles, independent of the opinions of the banking agencies. In support of its position, the government asserts that the Bank Merger Act does not authorize the Federal Reserve Board to decide antitrust questions as such, United States v. Radio Corp. of America, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed.2d 354 (1959), and stresses the Board’s required consideration of public interest factors, irrelevant to the antitrust laws, and the lack of adversary hearings.

In view of the Supreme Court’s decisions in United States v. Philadelphia Nat’l Bank, supra, and in United States v. First Nat’l Bank & Trust Co. of Lexington, 376 U.S. 665, 84 S.Ct. 1033, 12 L.Ed.2d 1 (1964), there is no longer any question that the Clayton and Sherman Acts apply to bank mergers and that the Bank Merger Act neither impairs the plenary jurisdiction of this court to adjudicate their validity, nor immunizes them from collateral attack here despite agency approval. It does not follow, however, that the court should ignore agency views.

PRIMARY JURISDICTION

In United States v. Philadelphia Nat’l Bank, supra,

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240 F. Supp. 867, 1965 U.S. Dist. LEXIS 7779, 1965 Trade Cas. (CCH) 71,408, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-manufacturers-hanover-trust-co-nysd-1965.