United States v. Phillipsburg National Bank & Trust Company

PETITIONER: United States
RESPONDENT: Phillipsburg National Bank & Trust Company
LOCATION: Cook County Circuit Court, Criminal Division

DOCKET NO.: 1093
DECIDED BY: Burger Court (1970-1971)
LOWER COURT:

CITATION: 399 US 350 (1970)
ARGUED: Apr 28, 1970
DECIDED: Jun 29, 1970

Facts of the case

Question

Media for United States v. Phillipsburg National Bank & Trust Company

Audio Transcription for Oral Argument - April 28, 1970 in United States v. Phillipsburg National Bank & Trust Company

Warren E. Burger:

We'll hear arguments in Number 1093, United States against the Phillipsburg National Bank and Trust Company.

Mr. Friedman, you may proceed whenever you're ready.

Daniel M. Friedman:

Mr. Chief Justice and may it please the Court.

This is a direct appeal from the District Court for the District of New Jersey from a judgment of the District Court there which after trial dismissed a government civil antitrust suit challenging the merger of two banks in the town of Phillipsburg, New Jersey as violating Section 7 of the Clayton Act.

The appeal presents a number of important questions as to the standards to be applied by the courts in passing upon the application of Section 7 to small bank mergers and also as to the correctness of certain rulings made by the District Court in this case in upholding the community convenience and needs defense that Congress wrote into the Bank Merger Act of 1966 as a permissible basis of justifying anticompetitive mergers.

Before discussing the facts in these legal issues however, I just briefly like to explain to the Court why the Government considers this an important case and why the Government has brought to this case a factual situation and on its face does not seem to be of the greatest economic significance.

Ten and 15 years ago, we had in this country a great wave of tremendous bank mergers.

Multibillion dollar institutions combine, institutions involving hundreds of million dollars combined in the large metropolitan areas, New York City, Philadelphia, Chicago, Houston and so on.

As a result of this Court's decision in 1963 in the Philadelphia Bank Merger case and a series of other decisions under Section 7 of the Clayton Act, the focus of the whole trend of bank mergers has shifted.

Today, we no longer have this pattern of large bank mergers in the big city.

Those seemed to be a thing of the past because under this Court's decisions, these combinations and these very large highly concentrated markets are illegal.

What we have instead is a developing trend of mergers along the smaller banks in the smaller areas and in the past four or five years, virtually all of the justice departments, bank merger suits have been brought against this type of merger.

The reason we have brought these cases is we think that since in the smaller marketing areas, the very nature of banking tends to make it a concentrated market, a relatively small number of banks and since in the smaller communities, as I shall develop in the course of my argument, the people particularly affected the small borrowers.

Most of the small banks tend to be primarily concerned with small customer.

We think it's particularly important in these smaller markets to preserve for banking customers the available alternatives of choice that is to make sure that in these markets, they already tend to be concentrated.

They do not take place a large number of bank mergers which further reduce the available alternatives and that's why we think this particular type of situation.

This is the first case that has come before this Court involving so-called small bank mergers and that's why we have brought the case and we think it's an important case.

Warren E. Burger:

There have been a quite a number of them in the Courts of Appeals, however, have there not?

Daniel M. Friedman:

In -- in the District Courts, Mr. Chief Justice.

Warren E. Burger:

Well then, they have gone to the Courts of Appeals.

Daniel M. Friedman:

No, Mr. Chief Justice.

These cases, we have lost I have to admit it, unfortunately, several of these cases in the District Courts, if we happen to appealed because these cases under the Expediting Act, all of these bank merger cases come directly from the District Court to this Court.

There have been other case, bank merger cases, involving other issues in the Courts of Appeals but there have been no -- none of the Government suits challenging bank mergers in the Courts of Appeals.

Warren E. Burger:

(Inaudible)

Not to appeal.

There have been I think three or four of them but those involved somewhat different situations.

Those in contrast to this case which involves the combination of two banks in the same market, direct competitors.

Most of the cases that we have brought and decided not to appeal have been cases in which a large bank from outside the immediate area has come in and acquired a bank in the market.

The theory there being there was an elimination of a potential competition of the bank that came in acquired to merger.

Byron R. White:

The situation is comparable with this Mr. Friedman.