Ryan, Ben H., immediate past president, Independent Bankers Smith, Milton A., associate general counsel, Chamber of Commerce Sparkman, Hon. John, a Senator from the State of Alabama. Van Cise, Jerrold G., New York State Bar Association.. Welsh, Philip F., Association of American Railroads.. 187 American Merchant Marine Institute, statement of Alvin Shapiro-- American Trucking Associations, Inc., statement of James F. Fort, assist- Association of the Bar of the State of New York, letter dated May 18, 1956, from Laurence I. Wood, New York, with attached statement by the com- Campbell, Rolla D., president, National Council of Coal Lessors, Inc., Commerce Department, letter dated May 22, 1956, from the Secretary__ Dickson, Rush S., president, American & Efird Mills, Inc., letter dated F. Eberstadt & Co., New York, letter dated May 14, 1956- Eureka-Security Fire & Marine Insurance Co., New York, letter dated Federal Communications Commission, letter dated May 24, 1956.. 481 525 Federal Power Commission, letter with attached report dated May 23, 477 Federal Reserve System, letter of June 1, 1956, from the Board of Govern- nors.. 454 Federal Trade Commission, letter dated May 16, 1956, with amendments 463 Federal Trade Commission, letter dated May 22, 1956, re S. 3341- 455 458 514 Interstate Commerce Commission, letter dated May 23, 1956... Investment Bankers Association of America, statement by W. Yost Johnson, Malcolm, of Everett & Johnson, New York, letter dated May 25, 516 National Association of Motor Bus Operators, letter dated May 22, 1956, 482 New York Chamber of Commerce, letter dated May 23, 1956 487 Ohio Manufacturers Association, Columbus, Ohio, letter dated May 21, 503 Rayon and Acetate Fiber Producers Group, New York, letter dated May St. Paul, Minn., Chamber of Commerce, letter dated June 12, 1956. 489 Small Business Administration, letter dated May 22, 1956- Smith, Curtis Lee, president, Cleveland, Ohio, Chamber of Commerce, letter of May 25, 1956 and attached report on H. R. 9424 - Strassburger, J. R., assistant secretary-treasurer, Chain Belt Co., Milwau- EXHIBIT Page 1 1 5 6 6 8 9 11 12 13 14 DIGEST OF TESTIMONY WEDNESDAY, MAY 23, 1956 Opening statement by Senator Joseph C. O'Mahoney, acting chairman of the Subcommittee on Antitrust and Monopoly. These hearings are to be held on "proposed legislation to strengthen the provisions of the Clayton Act dealing with business mergers." These bills are: H. R. 9424, sponsored by Representative Celler, chairman of the House Judiciary Committee, and passed by the House of Representatives on April 16, 1956; S. 3341, sponsored by Senator Sparkman; and S. 3424, sponsored by Senator Watkins. The three bills inserted at this point. The bills are designed to strengthen section 7 of the Clayton Act by (1) requiring that companies proposing to merge give the Government 90 days' notice of their intentions; (2) vesting in the Federal Trade Commission power to seek a court injunction, similar to power now held by Department of Justice, to restrain proposed mergers; and (3) subjecting bank mergers to "same legal standards of competition now applied to corporate mergers in general." In recent years there has been a great increase in the number of mergers in manufacturing and mining industries and of banks. *** The near record number of such transactions and the size and power of many of the corporations involved very properly raised the question as to whether further strengthening of the law is needed to cope with the merger problem. "The approach contained in the bills being considered by this subcommittee in the hearings beginning today warrants the most careful consideration. Under our system of promoting the maximum degree of freedom of business enterprise, added business regulation must not be undertaken lightly. At the same time, the public has a right to expect that the power of government will be used whenever necessary to protect the democratic basis of the economic system." Letter to Senator O'Mahoney from Senator Fulbright, chairman of Senate Banking and Currency Committee, pertaining to forthcoming hearings. Statement of Hon. John Sparkman. United States Senator from State of Introductory statement on growth of economic concentration and public policy in antitrust matters. There are many complaints received from the affected parties following consummation of an important merger. Listed some of those complaints. Due to the great increase in merger activity Senator Sparkman has introduced three bills during 84th Congress which he felt "would be useful to the antitrust agencies in preventing mergers that would substantially lessen competition or tend to create a monopoly." Discussed the provisions of S. 3341, an omnibus antimerger bill. Big flaw in existing legislation is that section 7 of Clayton Act covers only stock acquisition-not assets acquisition-in the banking field, “even though such mergers may involve a reasonable probability of a substantial lessening of competition or tendency to create a monopoly." Only after this loophole in the Clayton Act is plugged "will monopolistic banking mergers be subject to attack while still in an incipient stage: that is, before the consolidation has occurred." The other provision in his bill is to make section 7 applicable where either the acquiring or acquired corporations is in interstate commerce. Under existing law the acquired corporation must be in interstate com merce. Page 15 16 The Federal Trade Commission has supported this position. Most important procedural provision of S. 3341 is the one requiring that notice of an impending merger must be given the Attorney General and the Federal Trade Commission 90 days in advance of consummation if either party has assets of more than $1 million. However, after further consideration, Senator Sparkman believes this figure should be raised to correspond to the figure contained in Senator Watkins' bill-$10 million. Recommended such notice also be given the regulatory board having jurisdiction in appropriate cases. 17 S. 3341 also requires that "merging corporations must furnish to the Department of Justice and to the Federal Trade Commission all relevant data concerning the merger. Such information is to be submitted to the antitrust agencies in accordance with regulations to be issued by the Commission with the approval of the Attorney General." The bill would also prohibit disclosure of any of this information except in legal proceedings brought in connection with it. Suggestion has been made that prior notification be given 120 days in advance of merger instead of 90 days. To meet objections raised in connection with mergers already under way, a suggestion has been made that the law-when enacted-not become effective immediately. Because of the effect such a notice would have on a corporation's market operations, Senator Dirksen said consideration should be given to extending or shortening notification time in given cases. Senator Sparkman said, "It should also be noted that willful failure to comply with the notice and reporting requirements of S. 3341 is subject to a civil penalty of $5,000 for each day of delay. Thus, compliance with the provision is assured." However, the purpose of the provision might be served as well by a penalty ranging in amount from $5,000 to $50,000. Transactions not essentially mergers are exempted from coverage by "excluding from the scope of the provision instances where (1) stock is acquired solely for investment and does not exceed 5 percent of the outstanding share capital of the corporation in which the investment is made, or (2) the assets acquired do not exceed $5 million or 5 percent of the capital structure of either the acquiring or the acquired corporation." It is his belief that the provisions of his bill are so drawn as to exclude "relatively insignificant mergers" from notification and reporting requirements. In appropriate cases the 90-day waiting period could be waived by either antitrust agency, with the consent of the other agency. S. 3341 would authorize the FTC "to seek a preliminary injunction restraining consummation of a corporate merger pending final Commission action." "Another procedural change in S. 3341 grants the Federal Trade Commission authority to invoke equitable remedies short of divestiture in appropriate merger cases." In some cases, the remedy should perhaps be more than divestiture; in others, less. His bill S. 2205 is designed "to achieve speedy and effective compliance with cease and desist orders issued under the Clayton Act." This is done in two ways: (1) "Enforcement procedures of the act are brought into line with those being used by the Commission to enforce orders issued under section 5 of the Federal Trade Commission Act;" (2) "violation of the Clayton Act orders is made subject to the same civil penalties now applicable to violation of Federal Trade Commission Act orders." Senator Sparkman supports the administration's request that Congress appropriate almost $14 million for antimerger work of the FTC. Statement of Lee P. Miller, American Bankers Association; accompanied by J. O. Brott, general counsel, and James J. Saxon, assistant general counsel Statement of introduction. "The substantial diminution in the number of banks between 1921 and 1939 was primarily the result of the seriously overbanked situation which existed in the 1920's. This overbanked situation of the 1920's |