Mr. BROWNELL. There, again, it would be most difficult to answer that, certainly without knowing the legislative history that develops in the next few weeks in connection with both of these proposals, and at best it would take court decisions to interpret it.

The CHAIRMAN. Last year the Federal Reserve Board testified before this committee they would have no objection to amendment of section 7, such as is here proposed by my bill and Mr. Keating's bill, to cover bank mergers accomplished by asset acquisitions, provided that the Federal Reserve Board no longer has enforcement jurisdiction.

What is your position on the Board's suggestion in that regard? Mr. BROWNELL. As I point out a little later here in this prepared statement, we do not believe that the Antitrust Division of the Department of Justice should have the final say in these matters, because there are outside the field of antitrust certain banking considerations that must be taken into consideration, and therefore we would be entirely willing to have, and agreeable in every way to having, the appropriate banking agency be the final arbiter.

What we do say is that in this one field of antitrust, that it was only a matter of good government to have the matter referred to the agency which has the most to do with antitrust enforcement.

The CHAIRMAN. But you would want the final say as to whether or not there is a violation of the antitrust laws?

Mr. BROWNELL. We think that that would be a matter of good government, that one single agency should have the say in that regard. That has always been the position.

Mr. MALETZ. Mr. Attorney General

Mr. BROWNELL. Of course, it might be Federal Trade rather than the Antitrust Division.

Mr. MALETZ. Mr. Attorney General, at the present time, as you know, the Federal Reserve Board has concurrent jurisdiction with the Department of Justice respecting bank mergers accomplished by stock acquisitions. This bill proposes that section 7 be amended so as to give both agencies concurrent jurisdiction over all bank mergers regardless of how consummated, whether by stock or asset acquisitions.

The Federal Reserve Board testified last year that it would be in favor of such amendment, provided that the Board no longer had concurrent enforcement jurisdiction with the Department of Justice. What is your opinion respecting the Federal Reserve Board's recommendation in this area?

Mr. BROWNELL. We want only appropriate jurisdiction over the antitrust features.

Mr. MALETZ. Do you feel that the Federal Reserve Board should have continuing antitrust jurisdiction in this area, coordinate with jurisdiction by the Department of Justice?

Mr. BROWNELL. I will say this: that if we are consulted which I think we should be, I think the law should so state that we should so be so consulted, and give our opinion, I don't believe there would be much trouble involved if they had coordinate jurisdiction, because I think certainly in the past we have had no difficulty in working with them.

Mr. MALETZ. They say they do not want concurrent enforcement jurisdiction. They say they don't have the expertise to enforce section 7.

Would you go along with the Federal Reserve Board's recommendations in that respect?

Mr. BROWNELL. Yes, sir.

The CHAIRMAN. Mr. Keating?

Mr. KEATING. Mr. Attorney General, do you know the date upon which Mr. Gidney became Comptroller of the Currency.

Mr. BROWNELL. No, I do not.

Mr. KEATING. I will state to you as a fact it was April 16, 1953, and I now return to the question put to you by the chairman, that even though the Comptroller testified that he would not approve a merger where the effect might be substantially to lessen competition, from 1950 to May 1955 he did not formally disapprove any bank merger whatsoever for competitive reasons, isn't that right. Your answer was in the affirmative, based no doubt upon a lack of knowledge of the time when he became the Comptroller of the Currency. I feel sure that you would not have any knowledge about his predecessors in office.

Mr. BROWNELL. That is correct.

Mr. KEATING. At least you were referring only to Mr. Gidney and you were assuming that the chairman in these statements was giving you the dates when he served as the Comptroller of the Currency? Mr. BROWNELL. Yes. I am glad you brought that out because I would not want to have any misapprehension on that score.

As a matter of fact, even since he came into office I did not mean to reflect at all on his judgment in passing on these things. There may not have been substantial anticompetitive situations present at all. Mr. KEATING. In other words, during a 2-year period from April 1953 to May 1955 he did not formally disapprove any bank merger for competitive reasons.

There is nothing unusual or significant about that, is there?

Mr. BROWNELL. As a matter of fact, I think it was his practice not to state the reasons. He may have had them in mind without its being on the record.

The CHAIRMAN. I want to say that it is most unusual in my estimation that of all these applications for mergers presented to the Office of Comptroller of the Currency, not a single one was formally disapproved.

Mr. KEATING. How many did he pass on?

The CHAIRMAN. I don't know. He may have passed on some informally, I don't know, but the record can be disclosed in that regard and made manifest but I think it is most anomalous that this office passed on so many and did not formally disapprove a single one. It was not the chairman's intention to mislead in any respect.

When I spoke of 1950, I gave those figures to be embraced within the period 1950 to 1955, May 1955. I did not have in mind the fact that Mr. Gidney became the Comptroller of Currency in 1953, but apparently the record of his predecessor is no different than the record of Mr. Gidney in that regard.

We will put in the record at this point all the mergers involving national banks that took place from 1953, the time that Mr. Gidney assumed his office, until May 1955. It covers pages 480 to 492 of the hearings of the Antitrust Subcommittee of the House Committee on the Judiciary, part I, serial 3, Current Antitrust Problems, 84th Congress.

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 Flulu omittee, 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 achdooved by amending statutes in the manner recommended by the Treasury Department, Federal Reserve FDIC rather than amending the Clayton Act.

Wo bellove 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 Cigrom

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

agener.

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 ares 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 arrangenzert!

Mr. BROWNELL. My first proposal would be to have this handled under this standard setup in section 7 of the Carton Act exclusively, but an à morent I will come to a proposal which I think would come very close to souting up a workable arrangement between the banking sponges snd the Department of Justice which would carry out every ghing that we here è rind and still leave them the power which they be live that they should harm

THE CHAIRMAN. For w. panion a few questions before we get

Mr. BROWNELL. Yes, indeed; I think it will be clear after I have made a statement on the proposal.

The CHAIRMAN. It is correct, is it not, that at the present time under the Federal statutes the approval of the Comptroller of the Currency is necessary for all mergers between national banks or between national banks and State banks where the resulting institution is a national bank?

Mr. BROWNELL. Yes, that is right; but only certain ones and only the stock acquisitions can they apply an antitrust standard to.

The CHAIRMAN. That is right. Are you familiar with the fact that the Comptroller of the Currency, Mr. Gidney, testified on several occasions that he would not approve any bank merger or consolidation subject to his jurisdiction where the effect in any section of the country may be to substantially lessen competition or tend to create a monopoly?

He made those statements before this committee and before the Senate Antitrust Committee. Are you familiar with those statements?

Mr. BROWNELL. In a general way, yes.

The CHAIRMAN. In other words, it is correct, is it not, that Mr. Gidney has testified that he will not approve any national bank merger which is contrary to the principles set forth in the so-called Celler-Kefauver Act? That is the effect of those statements, isn't that correct?

Mr. BROWNELL. Of course he said also in his testimony:

I have not any competency in the antitrust field and I do not know what the courts have done.

The CHAIRMAN. I am coming to that.

Mr. BROWNELL. So that he is the first to recognize, and so stated in his own testimony, that that was not his baliwick, that he was really interpreting the provisions of the Banking Act outside the field of antitrust.

The CHAIRMAN. I will come to that in a minute. I will repeat the question though.

In other words, it is correct, is it not, that Mr. Gidney has testified that he will not approve a national bank merger which is contrary to the principles set forth in the Celler-Kefauver Act, that is he said that he would not approve it where there would be a tendency to create a monopoly or to substantially lessen competition in any section of the country.

When he makes those statements, that means that he wants to act within the purview of the Celler-Kefauver Act which amends section 7 of the Clayton Act; is that right?

Mr. BROWNELL. I would have a little different interpretation of that, Mr. Chairman. I think that he said that if that was the clear standard set up by the Congress, he would follow it.

I do not interpret him as saying that if the "unduly" provision is in there, that he would follow the present standard.

The CHAIRMAN. He said he would not follow

Mr. BROWNELL. Whatever the Congress set up.

Now we are trying to make the point that the Congress should set up one single standard which is just as clear as can be so that we

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. and 79):

78

*** 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):

The Con

To perform their purpose fully, the antitrust laws require not only vigorous enforcement but adaptation to changing economic conditions** *. gress 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.' Of this number