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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. 3948 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.

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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 : Annual Annual

Annual Year:

total Year-Continued total Year-Continued total 1919

438
1932.

203
1945.

333 1920.

760
1933

120
1916

419 1921

487
1934.

101
1947.

404 1922

309
1935.

130
1948

223 1923

311
1936.

126
1949.

126 1924

368
1937

124
1950.

219 1925.

55+
1938.

110
1951

235 1926.

856
1939.

87
1952

288 1927

870
1940.

140
1953

295 1928

1, 058
1941.

111
1954.

387 1929

1, 245
1942

118
1955

525 1930.

799
1943.

213
1956

537 1931.

464
1944.

324 3 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 : Annual Annual

Annual Year:

total Year--Continued total Year-Continued total 1921

305
1933

322
1945

79 1922

394
1934

231
1946

93 1923

392
1935.

160
1947

84 1924

373
1.036.

176
1948

75 1925

363
1937

186
1919.

77 1926.

462
1938.

100
1950

91 1927

567
1939

119
1951

82 1928

534
1940

96
1952

100 1929

636
1941

59
1953.

116 1930.

769
1942

89
1954

207 1931

798
1943

1955.

232 1932.

433
1944.

72
1956_

189

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86

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 prerent consummation of a merger pending the issuance of a complaint and the completion of the Commission's administrative proceelings.

In summary, my bill, H. R. 2133. 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 Attorner General in merger cases to seek a court injunction prerenting 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 Economie Report of 1936 and in his Exonomie 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 economie 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 proride larger appropria ions for their enforcement.

"Toward this end, the following rerisions of antitrust legislation are recommenderi. 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 require. ment 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, 1937, the President declared (p. 51):

*To perform their purpose fully, the antitrust laws require not only rigorous enforcement but adaptation to changing economie conditions * * * The Congress is urged to take farorable 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 aquisition; appiication of the Clayton Act to mergers where either party is in interstate connierce; and authorization of the Federal Trade ('ommission, in merger cases where it belieres violation is likely, to seek a preliminary injunction before a comp'aint is filed." +

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

Mr. KEITING. Mr. Chairman, may I make a short statement before we proceed!

The CHAIRMAX. Certainly.

Mr. KEATING. Since 1945 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 hare no effert upon competition. A merger as such involves no necessary connotations of coercion, dominance, or lack of effective competitive pressures. In addition, mergers may ease from the market companies which have failed in the competitive struggle and thus prevent potential bankruptcies. Finally, they may spur operating economies by spreading overhead costs or enabling improved technology or management.

* The Popsidat in his budget message for fiscal 1955 said (p. 119): **.. The Conzipas sha!! enact Ipgislation providing for notification to the Federal Gorernment of 1,-1.1.seard busins Creers, and should amend the procedural prorisions of the antitrust law to faciitate their enforcement."

That is the end of the quotation from the Attorney General's Committee's report. The problem, therefore, is not what to do about the number of mergers per se. Rather, it is how to prevent those mergers which will probably substantially lessen competition or tend to create a monopoly.

At present, agencies charged with the responsibility of ferreting out mergers with potential anticompetitive effects, before they occur, encounter the obstacle that corporations are under no legal obligation to inform the Government of their intent to merge. Consequently, considerable time, effort, and money are spent by these agencies in searching newspapers and trade journals to find out whether mergers are about to occur and in collecting economic data to determine whether full-scale investigations should be undertaken. Such a system is at best imperfect and, at times, these agencies are unable to uncover an illegal merger before its consummation. When this happens, the Government is faced with the very difficult task of trying to unscramble that which has already been scrambled.

It is certainly not to my purpose in the consideration of this legislation to unduly harass corporations by requiring them to give premerger notification and other information to Government agencies in those transactions having no competitive effect. In this regard, I would like to make it perfectly clear that I intend to support amendments to this legislation which will relieve business and government of unnecessary paperwork without, at the same time, destroying the fundamental objectives of the legislation which I feel are sound.

Thank you, Mr. Chairman.

The CHAIRMAN. I just want to state, in that latter connection, that before the bill was offered that bears my name, conferences were had with the Attorney General, with the Federal Trade Commission and other responsible agencies, and many exceptions were provided for in the new bill which would cover the situations adverted to by the distinguished gentleman from New York.

We have before us several distinguished representatives of the administration, Mr. Brownell, Attorney General; a former colleague, Mr. Gwynne, Chairman of the Federal Trade Commission; and the General Counsel of the Department of Commerce, Frederick C. Nash; and accompanying Mr. Brownell we have the distinguished head of the Antitrust Division of the Department of Justice, Victor R. Hansen,

Mr. Brownell, we will be very glad to hear from you.

TESTIMONY OF HON. HERBERT BROWNELL, JR., ATTORNEY GEN

ERAL OF THE UNITED STATES; ACCOMPANIED BY VICTOR R. HANSEN, HEAD OF THE ANTITRUST DIVISION, DEPARTMENT OF JUSTICE

Mr. BROWNELL. Mr. Chairman, members of the subcommittee, I am very glad to have this opportunity to present to you Justice Department views on two substantially similar pending bills-H. R.

* * *

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.' Of this number

1 Annual total mergers :

1951-
1952.
1953
1954.
1955
1956_

703 822 793 617 846 905

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. 3948 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.

* 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 : Annual Annual

Annual Year:

total Year-Continued total Year-Continued total 1919

438
1932

203
1945_

333 1920.

760
1933.

120
1946.

419 1921

487
1934.

101
1947

404 1922

309
1935

130
1948

223 1923_

311
1936

126
1949

126 1924.

368
1937

124
1950

219 1925.

554
1938.

110
1951.

235 1926.

856
1939

1952

288 1927

870
1940.

140
1953

295 1928

1, 058
1941.

111
1954.

387 1929

1, 245
1942.

118
1955

525 1930.

799
1943.

213
1956_

537 1931.

464
1944.

324 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 : Annual Annual

Annual Year:

total Year-Continued total Year-Continued total 1921

305
1933.

322
1945

79 1922

394
1934.

231
1946

93 1923.

392
1935.

160
1947

84 1924.

373
1936.

176
1948

75 1925.

363
1937

186

1949 1926

462
1938

100
1950

91 1927

567
1939

119
1951.

82 1928.

534
1940

96
1952

100 1929

636
1941

59
1953.

116 1930

769
1942

89
1954

207 1931

798
1943.

86
1955

232 1932.

433
1944.
72 1956.

189

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