won't have the different agencies coming out with differing interpretations. Mr. MALETZ. Mr. Attorney General, has it been called to your attention that the Comptroller of the Currency has testified before several congressional committees that in the exercise of his discretion he would. not approve any national bank merger, where the effect may be substantially to lessen competition or tend to create a monopoly in any section of the country? Mr. BROWNELL. I think that he was qualifying that to say that if that was the standard setup by the Congress, he would follow it. Mr. KEATING. In other words, that was the standard at that time? Mr. BROWNELL. Yes. Mr. KEATING. As to other corporations and he said he would follow it as to banks. But if they put the "unduly" in there, in the Senate bill and we set up the standard of "undue," he would not then require Mr. BROWNELL. That is right. Mr. KEATING (Continuing). The compliance with this word "substantial"? Mr. BROWNELL. I agree with Congressman Keating. The CHAIRMAN. Let us read what was said at the hearing. Mr. MALETZ. Mr. Chairman, testifying before the Senate Antitrust Subcommitte, Mr. Jennings, who is Deputy Comptroller of the Currency, stated as follows: It is the opinion of our counsel that under section 7 of the Clayton Act, if there is a substantial or if there may be a substantial lessening of competition, it is required that the application to merge be denied. That is the opinion of our counsel. The decision is based wholly on competitive factors. Testifying before this committee, Mr. Gidney stated as follows at pages 452 and 453 of volume I, Hearings on Current Antitrust Problems: Question: In other words, the Celler Act serves as a guide for your office in determining whether you approve or disapprove a merger involving national. banks; is that correct? Mr. GIDNEY. We would not feel that we could approve what we consider to be a violation of that principle, that is true. I do not believe we are charged with the administration of the act. That is a technical point. I do not want to labor it because I am not very well qualified. At page 483, Mr. Chairman, Mr. Gidney wrote a letter to you March 14, 1955, which stated in part: dated There may be a technical question as to the specific application of section 7 of the Clayton Act to these mergers. However, it has been the practice of the Comptroller before giving his approval to determine whether the effect of a merger in any section of the country may be to substantially lessen competition or to tend to create a monopoly. Mr. BROWNELL. I think that bears out, Mr. Chairman, what I said and what Congressman Keating also said, that he was talking about the present situation, and that that would not be binding on him at all if the new statute were passed and the new standard were created. The CHAIRMAN. Wasn't he indicating what his policy was? Mr. BROWNELL. As at present, but not if the new act were passed which established a different standard. The CHAIRMAN. Let's see how he has carried out the policy. The Comptroller of the Currency has approved 376 national bank mergers involving total resources of $5,224,000,000. That is found in volume I, Current Antitrust Problems, page 451, 1955. Are you aware of the fact, Mr. Attorney General, that in this same period Mr. Gidney testified the Comptroller of the Currency has not formally disapproved a single merger for competitive reasons? Mr. BROWNELL. Yes. The CHAIRMAN. Do you recall testifying, you yourself, before the Senate Banking and Currency Committee on February 18, 1957, as follows, page 1027: Senator DOUGLAS. In other words, up to date the Comptroller of Currency had tended to give little or no weight to the question as to whether or not competition would be substantially less? Mr. BROWNELL. I believe that is a fact, and I think his own testimony indicates that. You remember that, do you, that testimony? Mr. BROWNELL. Yes; I do. The CHAIRMAN. In other words, even though the Comptroller testifies that he will not approve a merger where the effect may be to substantially lessen competition, from 1950 to May 1955 he did not formally disapprove any bank merger whatsoever for competitive reasons; is that correct? Mr. BROWNELL. Yes. I think that illustrates what I have been trying to say here, that when you have two different agencies issuing interpretations of the same thing, you are bound to get differing results. Mr. KEATING. Let me ask a question. The CHAIRMAN. You ask a question later. Let me develop this, please. Mr. KEATING. I think it is important to this point. The CHAIRMAN. Make a note so you won't forget. In how many instances has Mr. Gidney sought advice from your office as to whether the effect of a given merger may be substantially to lessen competition or tend to create a monopoly? How many times has he consulted with you? Mr. BROWNELL. I would have to look that up. The CHAIRMAN. Would you supply that to the committee the number of times? Mr. BROWNELL. Surely. The CHAIRMAN. Have you any idea? Was it 7, 8, a dozen or 1? Mr. BROWNELL. I will furnish those figures. (Subsequently, the Department of Justice supplied the following:) Hon. EMANUEL CELLER, DEPARTMENT OF JUSTICE, Chairman, Antitrust Subcommittee, Committee on the Judiciary, House of Representatives, Washington, D. C. MY DEAR CONGRESSMAN CELLER: In Attorney General Herbert Brownell's appearance before your subcommittee on March 6, 1957, it was requested that the Department furnish you with instances in which Comptroller of the Currency Ray M. Gidney sought advice from the Antitrust Division as to whether the effect of a given merger may be substantially to lessen competition or tend to create a monopoly. We have reviewed our records and find that in only one instance was the Department's advice sought on a competitive effect of a particular bank merger problem. In that instance, members of the Comptroller's staff conferred informally with the Division around the end of September 1956 on the proposed acquisition of the Peoples Saving Bank of Port Huron (Mich.) by the Michigan National Bank. This proposed acquisition has been subject to a rather thorough investigation because of Sherman Act as well as Clayton Act problems. In two other instances, the Comptroller's office has forwarded information to the Division on bank mergers. On August 8, 1956, the proposed merger of Farmers & Merchants National Bank of Los Angeles and Security First National Bank of Los Angeles was brought to the Division's attention before the Comptroller had given his approval. It was with respect to this merger that I personally talked to Mr. Gidney on the telephone. Lack of section 7 jurisdiction because this transaction was consummated by an acquisition of assets precluded the Department from considering this matter under section 7. On August 17, 1956, the Comptroller called the Division's attention to his approval of the merger of the Delaware Valley Bank & Trust Company of Bristol (Pa.) and the Philadelphia National Bank of Philadelphia. In three other instances, our records show that the Comptroller's office was notified of our interest in certain bank merger problems. Notice was given on January 5, 1955, on the Chase-Manhattan Bank merger, March 7, 1955, on the National City-First National Bank merger, and around the 1st of December 1956 on the pending New York bank holding company formation which is now before the Federal Reserve Board for approval. In the Chase-Manhattan and National City-First National Bank mergers, this Department specifically requested from the Comptroller's office information or data relating to competitive aspects of these mergers. In the pending holding company problems, our requests for information have been mainly channeled through the Federal Reserve Board, the agency with primary jurisdiction over this matter under the Bank Holding Company Act of 1956. However, a recent information request has been made directly to the Comptroller's office. Sincerely yours, VICTOR R. HANSEN, Assistant Attorney General, Antitrust Division. The CHAIRMAN. Can Judge Hansen testify to that? Mr. BROWNELL. No; he is not prepared. We were just asking each other if we had any records with us which would show the answer to that, and we do not have them here. The CHAIRMAN. Would you say, Judge, from the time you became head of the Antitrust Division it was a limited number of occasions that the Comptroller of Currency conferred with you on these matters? Mr. HANSEN. I would rather get the facts. I know that I have talked to Mr. Gidney with reference to mergers. The CHAIRMAN. Do you remember now, have you any present recollection of any particular occasion when the Comptroller of Currency asked your advice about a bank merger? Mr. HANSEN. I remember specifically that he called me with reference to the merger of the Security First National Bank and the Farmers and Merchants National Bank in Los Angeles, but I would want to look at the record to find out exactly any others? The CHAIRMAN. Do you have in mind any other occasions when he called you? Mr. HANSEN. That is the one I recall now. There may have been others. The CHAIRMAN. Mr. Attorney General, Mr. Gidney testified, I believe, as follows before the Senate Banking Committee: "I have not any competency in that, the antitrust field. I do not know what the courts have done." You are aware of that statement; aren't you? Mr. BROWNELL. Yes. As a matter of fact I quoted that to you a moment ago. The CHAIRMAN. If the standards were to be changed as recommended by Mr. Gidney, it would require him only to consider among other things whether the effect may be unduly to lessen competition or unduly to create a monopoly. That is correct; isn't it? Mr. BROWNELL. Would you say that again, Mr. Chairman? I did not follow that. The CHAIRMAN. If the standards were to be changed as recommended by Mr. Gidney? Mr. BROWNELL. Yes. The CHAIRMAN. It would require him only to consider among other things whether the effect may be unduly to lessen competition? Mr. BROWNELL. That is right. The CHAIRMAN. Or unduly to create a monopoly? Mr. BROWNELL. That is right. The CHAIRMAN. And yet he admits that he has no expertise on these questions. Mr. BROWNELL. That is why we would think that it would only be a matter of commonsense and good government to have the Attorney General, that is, the Antitrust Division of the Department of Justice, consulted in all these cases. I think it is very important to have one single agency which will maintain the standard and interpret it. The CHAIRMAN. Under Mr. Gidney's proposal he would not have to ask your advice at all? Mr. BROWNELL. No; he would have the option to but he would not have to. The CHAIRMAN. He could disregard the Attorney General's Office completely? Mr. BROWNELL. Yes. The CHAIRMAN. Suppose that section 23 of the Senate Banking and Currency Committee bill should be adopted without the savings clause, such as you recommend, for the purpose of making clear continued applicability of the antitrust laws. Suppose, further, that a bank merger should take place accomplished by stock acquisition. Could the Department of Justice still proceed under section 7 by virtue of the fact that the acquisition is not exempted by present section 7 of the Clayton Act? Mr. BROWNELL. It would take a Philadelphia lawyer to answer that one. The CHAIRMAN. It is difficult. Mr. BROWNELL. It is difficult, and will be affected somewhat by the legislative history of these two proposals as they are developed in the succeeding weeks. The CHAIRMAN. It would certainly complicate the situation as far as your office is concerned. Mr. BROWNELL. Very much so. The CHAIRMAN. To pursue this further, if section 23 of Financial Institutions Act of 1957 is adopted without the antitrust savings clause, and if the present premerger notification bill is adopted, would a bank merger that has received advance approval by a Federal bank supervisory agency still be subject to antitrust prosecution by you under the Clayton Act? 90675-57-3 which enclosed a letter from the Director of the Bureau of the Budget stating that this proposed legislation is in accord with the program of the President of the United States. Then, Mr. Chairman, at the bottom of page 83, Mr. Gidney, Comptroller of the Currency, testifying before the Senate Antitrust Subcommittee, stated as follows: In closing I should like to earnestly recommend that this committee give very careful consideration to the recommendation that the desired result should be achieved by amending statutes in the manner recommended by the Treasury Department, Federal Reserve FDIC rather than amending the Clayton Act. We believe that this would be adequate protection to the public interest and in the best interests of maintaining a sound and public banking system. Continuing Mr. Gidney's testimony: The following is the text of the proposed bill to amend section 18 (c) of the Federal Deposit Insurance Corporation Act which has been transmitted to the Congress and there follows the text of the bill which is now section 23. The CHAIRMAN. Was your advice asked by the Secretary of the Treasury or the Comptroller of the Currency in preparing the draft of section 23? Mr. BROWNELL. We have had a number of conferences with the banking officials and the Treasury officials with relation to this whole problem, and I think there was some feeling on their part at the beginning at least that we thought that the Antitrust Division of the Department of Justice should be the sole judge as to whether or not the bank merger should be approved. I think we have pretty well dispelled that impression now. We do not seek to have, and have not at any time sought to have, the Antitrust Division pass on the question of whether or not the Federal Government should approve the bank merger. We believe that should be done as it always has been, by the appropriate banking agency. But when it comes to this one factor of whether or not there is a substantial lessening of competition, this much we believe to be our duty to state just as forcefully to the committee as we can. That is that there should be one standard, and that there should be one agency which interprets that standard. Otherwise you are going to get into a morass of conflicting interpretation, conflicting standards which will, I am quite confident, have the effect of weakening antitrust enforcement not only in the banking area but generally. The CHAIRMAN. And you are now registering disapproval of the plan of the Comptroller of Currency, the Secretary of the Treasury, and the FDIC in that regard, because it would result in a decentralized arrangement? Mr. BROWNELL. My first proposal would be to have this handled under this standard setup in section 7 of the Clayton Act exclusively, but in a moment I will come to a proposal which I think would come very close to setting up a workable arrangement between the banking agencies and the Department of Justice which would carry out everything that we have in mind and still leave them the power which they believe that they should have. The CHAIRMAN. You will pardon a few questions before we get to that? |