United States v. Philadelphia National Bank

374 U.S. 321 (1963)


The United States (P) brought this civil action to enjoin a proposed merger of The Philadelphia National Bank (PNB)(D) and Girard Trust Corn Exchange Bank (Girard) (D). Ds were the second and third largest commercial banks in the Philadelphia area. Were the proposed merger to be consummated, the resulting bank would be the largest in the four-county area, with approximately 36% of the area banks' total assets, 36% of deposits, and 34% of net loans. It and the second largest (First Pennsylvania Bank and Trust Company, now the largest) would have between them 59% of the total assets, 58% of deposits, and 58% of the net loans, while after the merger the four largest banks in the area would have 78% of total assets, 77% of deposits, and 78% of net loans. Ds attempted to show business justifications for the merger. They conceded that both banks were economically strong and had sound management, but offered the testimony of bankers to show that the resulting bank, with its greater prestige and increased lending limit, would be better able to compete with large out-of-state (particularly New York) banks, would attract new business to Philadelphia, and in general would promote the economic development of the metropolitan area. Ds offered testimony that the merger would enable certain economies of scale, specifically, that it would enable the formation of a more elaborate foreign department than either bank is presently able to maintain. The District Court held that §7 of the Clayton Act is inapplicable to bank mergers because banks are not corporations 'subject to the jurisdiction of the Federal Trade Commission.' It held that if §7 is applicable, the four-county Philadelphia metropolitan area is not the relevant geographical market because Ds actively compete with other banks for bank business throughout the greater part of the northeastern United States. It posited that even if the market were local, there was no reasonable probability that competition among commercial banks in the area will be substantially lessened as the result of the merger. P appealed.