Antitrust Division to Reexamine Bank Merger Guidelines

U.S. Assistant Attorney General for the Antitrust Division Jonathan Kanter questioned whether the 1995 bank merger guidelines are "adequate to measure and assess the many different dimensions of competition that exist today," in light of "an industry that has experienced some recent turmoil."

In an address before the Brookings Institution’s Center on Regulation and Markets, Mr. Kanter noted broad banking market changes since the guidelines were published, highlighting (i) that financial conglomerates today compete in "more geographic areas, across many more business lines," (ii) the diversification of financial services in the context of the global economy, and (iii) the emergence of FinTech and nonbank financial companies. By replacing the bank merger guidelines’ "outdated conception of banking" with current market realities, Mr. Kanter said that the banking community will benefit.

Mr. Kanter said that the DOJ is preparing a "competitive factors report" and plans to evaluate the "many ways in which competition manifests itself in a particular banking market." He said that the Division report will include an evaluation of fees, interest rates, branch locations, product variety, network effects, interoperability and customer service. Mr. Kanter highlighted two areas of focus:

• examining mergers that (i) increase risks associated with coordinated effects and multi-markets contracts and (ii) threaten to empower the most dominant banks by excluding existing or potential rival banks; and
• considering how proposed mergers could impact competition for different customer segments by recognizing that different customer types have different needs.

In addition, Mr. Kanter stated that the Antitrust Division is in the process of readjusting its focus on providing advisory opinions rather than, as has recently become customary, providing remedies agreements with parties.