Opinion of the Court by MR. JUSTICE DOUGLAS, announced by MR. JUSTICE BLACK.
This is a civil suit in which the United States charges that the consolidation of First National Bank and Trust Co. of Lexington, Kentucky (First National), and Security Trust Co. of Lexington (Security Trust), to form First Security National Bank and Trust Co. (First Security), constitutes a combination in restraint of trade and commerce in violation of § 1 of the Sherman Act and a combination and an attempt to monopolize trade and commerce in violation of § 2 of that Act.
The plan of consolidation was submitted to the Comptroller of the Currency and he, pursuant to the provision of the Bank Merger Act of 1960, 74 Stat. 129, 12 U. S. C. (Supp. IV) § 1828 (c), requested and received reports of the probable competitive effects of the proposed consolidation
We agree with the District Court that commercial banking is one relevant market
We also agree with the District Court that the consolidation should be judged in light of its effect on competition in Fayette County.
We turn then to the facts relevant to the alleged restraint of trade under the Sherman Act.
Prior to the consolidation the relative size of First National as compared to its five competitors was as follows:
Assets Deposits Loans First National................. 39.83% 40.06% 40.22% Citizens Union................. 17.06 16.78 16.41 Bank of Commerce............... 12.99 13.32 14.46 Security Trust................. 12.87 11.88 13.98 Central Bank................... 9.14 9.66 8.85 Second National................ 8.10 8.30 6.09
Assets Deposits Loans First Security................. 52.70% 51.95% 54.20% Citizens Union................. 17.06 16.78 16.41 Bank of Commerce............... 12.99 13.32 14.46 Central Bank................... 9.14 9.66 8.85 Second National................ 8.10 8.30 6.09
Prior to the consolidation, First National and Security Trust had been close competitors in the trust department business. Between them they held 94.82% of all trust assets, 92.20% of all trust department earnings, and 79.62% of all trust accounts:
Trust Number Trust Dept. of Trust Assets Earnings Accounts Security Trust................. 50.55% 46.91% 54.31% First National................. 44.27 45.29 25.31 Citizens Union................. 3.41 4.21 16.01 Second National................ 1.33 .63 2.12 Bank of Commerce............... .44 2.96 2.26
There was here no "predatory" purpose. But we think it clear that significant competition will be eliminated by the consolidation. There is testimony in the record from three of the four remaining banks that the consolidation will seriously affect their ability to compete effectively over the years; that the "image" of "bigness" is a powerful attraction to customers, an advantage that increases progressively with disparity in size; and that the multiplicity of extra services in the trust field which the new company could offer tends to foreclose competition there.
We think it clear that the elimination of significant competition between First National and Security Trust constitutes an unreasonable restraint of trade in violation
United States v. Union Pacific R. Co., 226 U.S. 61, was in the same tradition. Acquisition by Union Pacific of a controlling stock interest in Southern Pacific was held to violate § 1 of the Sherman Act. As in the Northern Securities case the Court held the combination illegal because of the elimination of the inter se competition between the merging companies, without reference to the strength or weakness of whatever competition remained. The Court said:
United States v. Reading Co., 253 U.S. 26, is the third of the series. There a holding company brought under common control two competing interstate carriers and two competing coal companies. That was held "without more" to be a violation of §§ 1 and 2 of the Sherman Act. Id., at 59.
The fourth of the series is United States v. Southern Pacific Co., 259 U.S. 214, in which the acquisition by Southern Pacific of stock of Central Pacific—a connecting link for transcontinental shipments by a competitor of Southern Pacific—was held to violate the Sherman Act. In reference to the earlier cases
We need not go so far here as we went in United States v. Yellow Cab Co., 332 U.S. 218, 225, where we said:
The four railroad cases at least stand for the proposition that where merging companies are major competitive
It is said that United States v. Columbia Steel Co., 334 U.S. 495, is counter to this view. There the United States Steel Corp. acquired the assets of Consolidated Steel Corp. Both made fabricated structural steel products, the former selling on a nation-wide basis, the latter in 11 States. The conclusion that the acquisition was lawful was reached after the Court observed, inter alia, that because of rate structures and the location of United States Steel's fabricating subsidiaries, the latter were unable to compete effectively in Consolidated's market. Id., at 511-518, 529-530. The Columbia Steel case must be confined to its special facts. The Court said:
In the present case all those factors clearly point the other way, as we have seen. Where, as here, the
MR. JUSTICE BRENNAN and MR. JUSTICE WHITE agree with the Court that the elimination of competition between the two banks in the circumstances here presented was a violation of § 1 of the Sherman Act. They would rest the reversal, however, solely on the conclusion that the factors relied on in United States v. Columbia Steel Co., 334 U.S. 495, 527-528, quoted by the Court, as applied to the facts of this case, clearly compel the reversal.
MR. JUSTICE HARLAN, whom MR. JUSTICE STEWART joins, dissenting.
But for the Court's return to a discarded theory of anti-trust law, this case would have little future importance. The decision last Term in United States v. Philadelphia National Bank, 374 U.S. 321, that § 7 of the Clayton Act, 15 U. S. C. § 18, is applicable to bank mergers surely marks the end of cases like this one, in which the Government relies solely on §§ 1 and 2 of the Sherman Act, 15 U. S. C. §§ 1, 2. Since, however, this case, doomed to be a novelty in the reports, has become the vehicle for turning the clock back to antitrust law of days long past, I am constrained to do more than merely register my dissent.
Stripped of embellishments, the Court's opinion amounts to an invocation of formulas of antitrust numerology and a presumption that in the antitrust field good
The testimony to which the Court adverts was provided by competitors of First Security and was characterized by the district judge who heard it as seemingly "based merely upon surmise and . . . lacking in factual support." 208 F.Supp. 457, 460. Since the Court suggests no reason for regarding this evidentiary finding of the trial court as "clearly erroneous," it must be accepted here, e. g., United States v. Yellow Cab Co., 338 U.S. 338, 341-342, leaving as the factual basis for the Court's decision only the statistics unquestionably showing that First National and Security Trust were big and First Security is bigger. The embellishment which adorns these statistics is the proposition that "where merging companies are major competitive factors in a relevant market, the elimination of significant competition between them, by
The sole support for this proposition, which is defended by no independent reasoning whatever, is the four "railroad cases," a reiteration of which forms the bulk of the Court's opinion.
In United States v. Columbia Steel Co., 334 U.S. 495, these same cases were cited by the Government for the same proposition urged here: that "control by one competitor over another violates the Sherman Act . . . ," id., at 531. The Court relegated the cases to a footnote and stated that it would not "examine those cases to determine whether we would now approve either their language or their holdings." Ibid. The facts of the "railroad cases" were found to be "so dissimilar from that presented" that they could "furnish little guidance" in deciding the later case. Ibid. Beyond this explicit rejection of these cases as a basis for decision is their further rejection clearly implicit in the portion of the Columbia Steel opinion which the Court quotes, ante, p. 672.
Quite obviously, if "bigness" alone provided a sufficient answer to the questions involved in a § 1 charge, it would be pointless to attend to the factors set out in Columbia Steel and reiterated here, in form approvingly but in fact without regard.
If regard be had to the criteria enumerated in Columbia Steel, none of them except perhaps those which deal with "bigness" favor the Government here. Although for purposes of the Sherman Act, such statistics have little meaning in the absence of a context,
The motive behind the consolidation also is indicated by the findings below, similarly unchallenged, that ". . . the consolidation herein referred to clearly appears to have been the result of a lawful program of expansion on the part of the merging banks rather than an invidious scheme to restrain competition or to secure monopoly in the local field of banking." 208 F. Supp., at 460. Any doubts on this score are removed by the explicit concession of government counsel at oral argument before this Court that there is no evidence at all in the record of an anticompetitive motive behind the consolidation.
There is nothing whatever in the findings below or in the opinion of this Court pertinent to the other criteria laid down in Columbia Steel—the probable development of the industry, consumer demands, and other market characteristics—which supports the Court's conclusion.
The truth is, of course, that this is, if anything, a Clayton Act case masquerading in the garb of the Sherman Act. One can hardly doubt that it comes to us under these false colors only because the decision last Term that bank mergers could be reached under the Clayton Act was indeed a surprise to the Government. See my dissenting opinion in Philadelphia National Bank, supra, at 373. No one has more sympathy for the Government in this respect than I. Nevertheless, having "at the outset elected to proceed not under the Clayton but the Sherman Act," Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 609, "the Government here must measure up to the criteria of the more stringent law," id., at 610.
The pernicious effect of allowing the Government to change horses in midstream in fact if not quite in form
Adherence to the principles enunciated in Columbia Steel, supra, would leave room for an accommodation within the framework of the antitrust laws of the special features of banking recognized by Congress. It is difficult to see how features peculiar to banking or indeed any other features of a particular case which, in reason, should lead to a different result, can stand up against the bludgeon with which the Court now strikes at combinations which may well have no fault except "bigness."
I would affirm.
"SEC. 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. . . .
"SEC. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor. . . ."