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United States v. First Nat'l Bank of Lexington, 376 U.S. 665 (1964)

United States v. First National Bank & Trust Co. of Lexington

No. 36

Argued March 4-5, 1964

Decided April 6, 1964

376 U.S. 665


In this civil action, the United States, the appellant, charges that the consolidation of the largest and fourth largest of the six commercial banks in Fayette County, Kentucky, violates §§ 1 and 2 of the Sherman Act. The Comptroller of the Currency had approved the consolidation, although reports, required by the Bank Merger Act of 1960, from the Attorney General, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System all concluded that it would adversely affect competition in the area. Although recognizing that approval by the Comptroller of the Currency did not immunize the consolidation from the operation of the Act, the District Court found that no violation was shown.

Held: The consolidation of the appellee banks constitutes a violation of § 1 of the Sherman Act. Pp. 376 U. S. 666-673.

(a) Commercial banking is one relevant product market in which to judge the effect of the consolidation on competition. Pp. 376 U. S. 666-668.

(b) The consolidation should be judged by its effect on competition in Fayette County, the geographical market. P. 376 U. S. 668.

(c) The new bank controls over half of the relevant market, and, by its disparity of size, as attested by three of the four remaining banks, will seriously affect their long-range ability to compete, despite the absence of any "predatory" purpose. P. 376 U. S. 669.

(d) The elimination of significant competition between the parties to the consolidation, which were major competitive factors in the relevant market, of itself constitutes an unreasonable restraint of trade in violation of § 1 of the Act. Northern Securities Co. v. United States, 193 U. S. 197, followed; United States v. Columbia Steel Co., 334 U. S. 495, distinguished. Pp. 376 U. S. 669-673.

208 F. Supp. 457 reversed.

Page 376 U. S. 666

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