United States v. Connecticut Nat’l Bank, 418 U.S. 656 (1974)

United States v. Connecticut National Bank

No. 73-767

Argued April 23, 1974
Decided June 26, 1974
418 U.S. 656

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT

Syllabus

The United States brought this civil antitrust action under § 7 of the Clayton Act challenging a proposed consolidation between the Connecticut National Bank (CNB) and the First New Haven National Bank (FNH), which are, respectively, the fourth and eighth largest commercial banks in Connecticut. The banks operate in contiguous areas of the State, CNB having headquarters in Bridgeport, with 51 offices there and in nearby towns; FNH having headquarters in New Haven, with 22 offices there and in nearby towns. The Government contended that the merger would eliminate significant potential competition in commercial banking in the New Haven and Bridgeport metropolitan areas and in other areas in Connecticut. The District Court rejected the Government’s arguments in support of that position, relying on state law restraints on de novo branching, the two banks’ expansion plans and capabilities, the posture of national and state regulatory officials regarding the issuance of new bank charters, and the existence and economic feasibility of possible foothold acquisitions. The court concluded that, under § 7, commercial banking is not a distinct line of commerce in Connecticut, and that the relevant geographic market or "section of the country" under that provision is the State as a whole.

Held:

1. The District Court erred in holding that the appropriate "line of commerce" within the meaning of § 7 included both commercial banks and savings banks. Pp. 660-666.

2. The District Court further erred in ruling that the relevant geographic market is the State of Connecticut as a whole. In a potential competition case like this, the relevant geographic market must be defined as the localized area in which the acquired bank is in significant, direct competition with other banks, albeit not the acquiring bank. United States v. Marine Bancorporation, ante, p. 602. Pp. 666-668.

3. On remand, the District Court must make a determination as to the geographic market in which each of the banks operates and to which the bulk of it customers may turn for alternative commercial bank services, and, in making that determination, it will be aided by the following considerations: (i) the Government has the burden of producing evidence to define localized banking markets; (ii) in satisfying that burden (as the District Court correctly held), the Government cannot rely only on Standard Metropolitan Statistical Areas; and (iii) town boundaries, although significant, are not controlling. Pp. 668-671.

4. The Government’s contention that the State as a whole, though not a banking market, is a "section of the country" within the meaning of § 7 is without merit, Marine Bancorporation, supra. Pp. 672-673.

362 F.Supp. 240, vacated and remanded.

POWELL, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, BLACKMUN, and REHNQUIST, JJ., joined, and in Part I of which DOUGLAS, BRENNAN, WHITE, and MARSHALL, JJ., joined. WHITE, J., filed an opinion concurring in part and dissenting in part, in which DOUGLAS, BRENNAN, and MARSHALL, JJ., joined, post, p. 673.