United States v. First City National Bank of Houston

PETITIONER: United States
RESPONDENT: First City National Bank of Houston
LOCATION: Sealy Corporation

DOCKET NO.: 914
DECIDED BY: Warren Court (1965-1967)
LOWER COURT:

CITATION: 386 US 361 (1967)
ARGUED: Feb 20, 1967 / Feb 21, 1967
DECIDED: Mar 27, 1967

Facts of the case

Question

Media for United States v. First City National Bank of Houston

Audio Transcription for Oral Argument - February 20, 1967 in United States v. First City National Bank of Houston

Audio Transcription for Oral Argument - February 21, 1967 in United States v. First City National Bank of Houston

Earl Warren:

United States, Appellant, versus First City National Bank of Houston.

Mr. Turner you may continue your argument.

Donald F. Turner:

Thank you Mr. Chief Justice, may it please the Court.

Very briefly, we have before us two cases involving bank mergers and dismissal of complaints brought by the Government involving interpretation of the Bank Merger Act of 1966 and more particularly the following provisions.

The Act provides that in determining whether or not to approve a bank merger, the responsible banking agency whose approval is required shall not approve any proposed merger transaction whose effect in any section of the country may be to substantially lessen competition or tend to create a monopoly or in which in any other manner would be in restraint of trade unless it finds that the anticompetitive effects of the proposed transaction are 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.

The statute further provides that in any action brought under the antitrust laws challenging a merger which has been approved by a bank agency, the court shall review de novo the issues presented.

And it further provides that in any antitrust proceeding, the standards applied by the Court shall be identical with those the banking agencies are directed to apply under Paragraph 5, the paragraph which I just quoted.

Now yesterday, I endeavored to discuss one issue raised by the Houston banks in their case, namely an issue -- a claim that the dismissal in that case was simply on the basis that the Government has failed to allege facts concerning convenience and needs rather than on the basis that the Government had failed to meet the burden of proof on both competitive needs and the competitive consequences and convenience and needs.

Today I want to address myself to what we deem to be the two major issues on the case which are closely interrelated.

And the first is whether the Bank Merger Act of 1966 contemplates that in an antitrust proceeding, the function of the court really is to apply a review standard to the determination made by the banking agency, that is to say the kind of review standard that would be applied, say by the Court of Appeals in reviewing the action of the ordinary administrative agency made on the basis of the full hearing and the full record.

Second, assuming that this is not so, that it is the function of the court to make an independent determination and come to its own conclusion whether the burden of proof is on the Government to allege and prove not only the necessary anticompetitive consequences but also the -- a negative proposition that these are not out -- not clearly outweighed by the convenience and needs of the community.

Potter Stewart:

Mr. Turner --

Donald F. Turner:

But whether on the other hand, that is a matter to be -- to be raised by defendants with the burden lying on them.

Yes Mr. Justice?

Potter Stewart:

If this is a review procedure --

Donald F. Turner:

Yes.

Potter Stewart:

-- of the more or less conventional kind, then I suppose, it'd be rather clear that the burden is on the Government --

Donald F. Turner:

That is correct.

Potter Stewart:

-- that the jury --

Donald F. Turner:

That is correct.

Potter Stewart:

Right.

Donald F. Turner:

And as if we -- if it is a review procedure, not only is the burden on the Government to allege and prove the negative proposition that I have just suggested --

Potter Stewart:

(Inaudible)

Donald F. Turner:

-- probably considerably more than that --

Potter Stewart:

-- administrative finding, yes.

Donald F. Turner:

Namely that the determination of the agency either was based on insubstantial evidence --

Potter Stewart:

Or was capricious or --

Donald F. Turner:

Or was arbitrary and capricious.

Potter Stewart:

Right, right.

Donald F. Turner:

That's correct.