"(8) Acquisition, solely for the purpose of investment of assets, other than voting stock or other voting share capital, by any bank, banking association, trust company or insurance company, in the ordinary course of its business;

"(9) Acquisition of stock, other share capital, or assets of any corporation, if the acquiring corporation, prior to such auquisition, owned directly or indirectly, more than 50 per centum of the outstanding voting stock of the corporation whose stock, other share capital, or assets are acquired, or if more than 50 per centum of the outstanding voting stock of the acquiring corporation is owned, directly or indirectly, by a corporation which, prior to such acquisition, owned, directly or indirectly, more than 50 per centum of the outstanding voting stock of the corporation whose stock, other share capital, or assets are acquired;

"(10) Any acquisition of stock or assets which, under any specific provision of law, requires the approval in advance of a commission or board or other agency of the United States, and when so approved is exempt under any specific provision of law from the provisions of this section: Provided, however, That any commission, board, or agency of the United States which is authorized by law to approve the acquisition by one corporation of the stock or assets of another corporation where by virtue of such approval such acquisition is exempted from the provisions of this section shall promptly notify the Attorney General of any application or request for such approval.

"Except for the provisions of the two preceding paragraphs this section shall not apply to corporations purchasing stock solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition. Nor shall anything contained in this section prevent a corporation engaged in commerce from causing the formation of subsidiary corporations for the actual carrying on of their legitimate branches or extensions thereof, or from owning and holding all or a part of the stock of such subsidiary corporations, when the effect of such formation is not substantially to lessen competition."

SEC. 2. The second and third paragraphs of section 1 of this Act shall take effect one hundred and twenty days after their enactment. The procedures for the waiver by the appropriate commission or board and the Attorney General of all or part of the notification and waiting requirements in appropriate cases and categories of cases required by the second paragraph of section 1 of this Act shall be established within one hundred and twenty days after enactment of this Act.

SEC. 3. That section 15 of said Act is amended by inserting after the first paragraph thereof the following paragraph:

"Whenever the Federal Trade Commission has reason to believe

"(1) that any corporation subject to its jurisdiction is acquiring or has acquired stock or assets of another corporation in violation of the provisions of section 7 of this Act; and

"(2) that the enjoining of such acquisition or the maintenance of the status quo after acquisition pending the issuance of a complaint or the completion of proceedings pursuant to a complaint by the Commission under this section and until such complaint is dismissed by the Commission or set aside by the court on review, would be to the interest of the public.

the Commission, by any of its attorneys designated by it for such purpose, may bring suit in a district court of the United States to prevent and restrain violation of section 7 of this Act or to require maintenance of the status quo. Any such suit may be brought in any district in which the acquiring or the acquired corporation resides or transacts business. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited, and the court may make such temporary restraining order or prohibition as shall be deemed just in the premises. In any case where injunction or restraining order is granted under this paragraph, the Federal Trade Commission shall proceed as soon as may be to the issuance of the complaint and to the hearing and determination of the case."

The CHAIRMAN. Present corporate and bank merger activity constitutes one of the most ominous clouds on the economic horizon. It is playing a significant role in hastening the reduction of competition in many areas and concentrating economic power in the hands of increasingly small groups.

To illustrate the extent of the merger trend, in the industrial segment of the economy from 1951 through 1956 there took place 4,686 mergers. Of this number 2,267 comprised corporate mergers and acquisitions in manufacturing and mining alone. Not only that, in 1956, the number of mergers in manufacturing and mining set a 26-year record and proceeded at a rate of four times that of 1949. Thus, as the New York Times concluded, "the wave of industrial mergers is now more like a floodtide, so wide and pervasive has it become."

While in a number of instances corporate consolidations have helped promote competition, many have frustrated the basic objective of the antitrust laws in the preservation of a free competitive enterprise system where economic activity is controlled so far as possible by the market and not by men.

In banking, there is also a rapidly accelerating merger trend which stands out as a major development. During the period from 1950 through 1956, for example, some 1,017 of the country's commercial banks have disappeared by way of mergers or consolidations.

Indeed, largely as a result of bank merger activity, the 100 largest banks in the Nation today control over 46 percent of all commercial banks and more than 48 percent of all commercial bank deposits. Furthermore, in each of a majority of the leading financial centers, a handful of banks control a predominant share of banking resources. It is against this background that our Antitrust Subcommittee is holding hearings on the two pending bills which are similar in

purpose.

In the course of these hearings all interested parties are being given opportunity to present their point of view.

The bills now to be considered combine substantially the provisions of bills introduced during the last Congress-H. R. 5948 and H. R. 9424 which passed the house of Representatives without dissent and were pending in the Senate when Congress adjourned.

The first purpose of each is to close a gap in section 7 of the Clayton Act as amended by the Celler-Kefauver Act and provide Federal enforcement agencies with the same authority to move against bank mergers accomplished by asset acquisitions as by stock acquisitions. The second objective is to require parties to a proposed merger, whose capitalization exceeds $10 million, to notify the Attorney General and the Federal Trade Commission or other appropriate board in advance of the transaction so as to afford the agencies opportunity to assess the merger's probable impact on competition. The bills do not require advance agency approval of a merger.

Procedures are to be established by enforcement agencies for waiving all or part of the notification of waiting requirements in categories of cases where notification and a waiting period is deemed unnecessary to effectuate enforcement of the antimerger law.

The third purpose is to provide the Federal Trade Commission with authority similar to that of the Attorney General, to seek a court order to prevent consummation of a merger pending the issuance of a complaint and the completion of the Commission's administrative proceedings.

In summary, my bill, H. R. 2143, is deemed particularly important, first, to close a loophole in present antitrust legislation pertaining to

bank mergers; second, to afford enforcement officials a reasonable period of time in which to study the competitive implications of a merger; and third, to give the Federal Trade Commission coordinate power with the Attorney General in merger cases to seek a court injunction preventing the commingling of assets, management, and productive facilities to a point where they cannot be effectively unscrambled.

It will be observed that the President has submitted recommendations to the Congress in his Economic Report of 1956 and in his Economic report of 1957 for legislation embodying principles contained in these bills.

As the President stated (Economic Report, January 23, 1956, pp. 78 and 79):

*** mergers have become more numerous of late and an eye, at once vigilant and discriminating, must be kept on such developments. Many mergers have a solid economic justification and serve the general interest by increasing competition; others have neutral effects; while still others place obstacles in the path of effective competition.

Over the years Americans have wisely viewed excessive business concentration, or any other undue concentration of economic power, with uneasiness. To serve the basic American desire for an economy in which business opportunities are increasing and in which economic control is widely diffused, it is desirable to strengthen our antitrust laws and provide larger appropriations for their enforcement.

Toward this end, the following revisions of antitrust legislation are recommended. First, all firms of significant size that are engaging in interstate commerce and plan to merge should be required to give advance notice of the proposed merger to the antitrust agencies, and to supply the information needed to assess its probable impact on competition. Second, Federal regulation should be extended to all mergers of banking institutions. Combined with the requirement for advance notice, this extension of the law would give the Government an opportunity to prevent mergers that are likely to result in undue restraint of banking competition.

Again, in the Economic Report of January 23, 1957, the President declared (p. 51):

To perform their purpose fully, the antitrust laws require not only vigorous enforcement but adaptation to changing economic conditions ***. The Congress is urged to take favorable action on these proposals. ** * (A) series of interrelated measures would strengthen the Government's ability to deal specifically with mergers: Requirement of advance notification of proposed mergers that are likely to have significant effect on competition; extension of Federal regulation to cover bank mergers by asset as well as by stock acquisition; application of the Clayton Act to mergers where either party is in interstate commerce; and authorization of the Federal Trade Commission, in merger cases where it believes violation is likely, to seek a preliminary injunction before a complaint is filed.

(The chairman's statement in its entirety is as follows:)

Present corporate and bank merger activity constitutes one of the most ominous clouds on the economic horizon. It is playing a significant role in hastening the reduction of competition in many areas and concentrating economic power in the hands of increasingly small groups.

To illustrate the extent of the merger trend, in the industrial segment of the economy from 1951 through 1956 there took place 4,686 mergers.1 Of this number

2,267 comprised corporate mergers and acquisitions in manufacturing and mining alone. Not only that, in 1956, the number of mergers in manufacturing and mining set a 26-year record and proceeded at a rate four times that of 1949. Thus, as the New York Times concluded, "the wave of industrial mergers is now more like a floodtide so wide and pervasive has it become."

While in a number of instances corporate consolidations have helped promote competition, many have frustrated the basic objective of the antitrust laws in the preservation of a free competitive enterprise system where economic activity is controlled so far as possible by the market and not by men.

In banking, there is also a rapidly accelerating merger trend which stands out as a major development. During the period from 1950 through 1956, for example, some 1,017 of the country's commercial banks have disappeared by way of mergers or consolidations. Indeed, largely as a result of bank merger activity, the 100 largest banks in the Nation today control over 46 percent of all commercial banks and more than 48 percent of all commercial bank deposits. Furthermore, in each of a majority of the leading financial centers, a handful of banks control a predominant share of banking resources.

It is against this background that our Antitrust Subcommittee is holding hearings on the two pending bills which are similar in purpose. In the course of these hearings all interested parties are being given opportunity to present their points of view.

The bills now to be considered combine substantially the provisions of bills introduced during the last Congress (H. R. 5948 and H. R. 9424), which passed the House of Representatives unanimously and were pending in the Senate when Congress adjourned.

The first purpose of each is to close a gap in section 7 of the Clayton Act as amended by the Celler-Kefauver Act and provide Federal enforcement agencies with the same authority to move against bank mergers accomplished by asset asquisitions as by stock acquisitions.

The second objective is to require parties to a proposed merger, whose capitalization exceeds $10 million, to notify the Attorney General and the Federal Trade Commission or other appropriate board in advance of the transaction so as to afford the agencies opportunity to assess the merger's probable impact on competition. The bills do not require advance agency approval of a merger.

Procedures are to be established by enforcement agencies for waiving all or part of the notification of waiting requirements in categories of cases where notification and a waiting period is deemed unnecessary to effectuate enforcement of the antimerger law.

2 The Federal Trade Commission reports the following number of mergers in manufacturing and mining for each year since 1919 on the basis of information obtained from financial publications:

The following table supplied the House Antitrust Subcommittee by the Federal Reserve Board shows the annual number of banks consolidations and absorptions for each year from 1921:

The third purpose is to provide the Federal Trade Commission with authority similar to that of the Attorney General, to seek a court order to prevent consummation of a merger pending the issuance of a complaint and the completion of the Commission's administrative proceedings.

In summary, my bill, H. R. 2143, is deemed particularly important, first, to close a loophole in present antitrust legislation pertaining to bank mergers; second, to afford enforcement officials a reasonable period of time in which to study the competitive implications of a merger; and, third, to give the Federal Trade Commission coordinate power with the Attorney General in merger cases to seek a court injunction preventing the commingling of assets, management, and productive facilities to a point where they cannot be effectively unscrambled. It will be observed that the President has submitted recommendations to the Congress in his Economic Report of 1956 and in his Economic Report of 1957 for legislation embodying principles contained in these bills. As the President stated (Economic Report, January 23, 1956, pp. 78–79):

"*** mergers have become more numerous of late and an eye, at once vigilant and discriminating, must be kept on such developments. Many mergers have a solid economic justification and serve the general interest by increasing competition; others have neutral effects; while still others place obstacles in the path of effective competition. Over the years Americans have wisely viewed excessive business concentration, or any other undue concentration of economic power, with uneasiness. To serve the basic American desire for an economy in which business opportunities are increasing and in which economic control is widely diffused, it is desirable to strengthen our antitrust laws and provide larger appropriations for their enforcement.

"Toward this end, the following revisions of antitrust legislation are recommended. First, all firms of significant size that are engaging in interstate commerce and plan to merge should be required to give advance notice of the proposed merger to the antitrust agencies, and to supply the information needed to assess its probable impact on competition. Second, Federal regulation should be extended to all mergers of banking institutions. Combined with the requirement for advance notice, this extension of the law would give the Government an opportunity to prevent mergers that are likely to result in undue restraint of banking competition."

Again, in the Economic Report of January 23, 1957, the President declared (p. 51):

"To perform their purpose fully, the antitrust laws require not only vigorous enforcement but adaptation to changing economic conditions ** * *. The Congress is urged to take favorable action on these proposals * * *. [A] series of interrelated measures would strengthen the Government's ability to deal specifically with mergers: Requirement of advance notification of proposed mergers that are likely to have significant effect on competition; extension of Federal regulation to cover bank mergers by asset as well as by stock acquisition; application of the Clayton Act to mergers where either party is in interstate commerce; and authorization of the Federal Trade Commission, in merger cases where it believes violation is likely, to seek a preliminary injunction before a complaint is filed."

We now have before us three distinguished representatives of the administration.

Mr. KEATING. Mr. Chairman, may I make a short statement before we proceed?

The CHAIRMAN. Certainly.

Mr. KEATING. Since 1949 the number of corporate mergers each year has been generally increasing. This trend of mergers, however, may or may not be harmful to private competitive enterprise. I would like to read two or three sentences from the report of Attorney General Brownell's National Committee To Study the Antitrust Laws:

** mergers are a common form of growth; they may lessen, increase, or have no effect upon competition. A merger as such involves no necessary con

The President in his budget message for fiscal 1958 said (p. M19): "*** The Congress should enact legislation providing for notification to the Federal Government of proposed business mergers, and should amend the procedural provisions of the antitrust laws to facilitate their enforcement."