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Article Highlights:

The Antitrust Division (Division) of the Department of Justice (DOJ) is seeking public comment on the Division’s consideration of whether to revise the 1995 Bank Merger Competitive Review guidelines (Bank Merger Guidelines) or DOJ’s competitive analysis of bank mergers. In addition to asking for general public input, the DOJ specifically inquires:

  • Banking-Specific Guidelines – Is it useful to have banking-specific merger review guidance beyond the 2010 Horizontal Merger Guidelines (Horizontal Merger Guidelines)? If so, is it helpful to have joint guidance from the DOJ and the federal banking agencies?
  • Herfindahl-Hirschman Index (HHI) Threshold – Should the HHI thresholds in the Bank Merger Guidelines be aligned with those in the Horizontal Merger Guidelines? Should the HHI thresholds be the same for urban and rural markets?
  • Product Markets – DOJ typically reviews retail banking products and services, small business banking products and services, and middle market banking products and services in its antitrust reviews. Are there other banking products or services that should be considered?
  • Geographic Markets – The Bank Merger Guidelines call for use of Federal Reserve Banking Markets or counties as the geographic markets for merger reviews. Are these the appropriate markets? Are the markets for consumer and small business banking products and services still local?
  • Competitors – Which market participants should be considered competitors for the purposes of antitrust analysis? Does DOJ give appropriate weight to credit unions and thrifts? How should the DOJ evaluate lending by farm credit agencies in rural markets? Should DOJ consider online banks? If so, how?

Given the changes in banking since 1995, it is an appropriate time for DOJ to reevaluate the Bank Merger Guidelines. Digital banking has changed how consumers and small businesses connect with their financial institutions and opened markets to new competitors without brick and mortar locations. In addition, many thrifts, credit unions, and farm credit lenders have significantly expanded their product and service offerings. Credit unions in particular have undergone substantial changes in common bonds and field of membership requirements that expand the number of consumers and small businesses that can use their services. Industrial loan companies provide additional competition for some financial services. Updating the Bank Merger Guidelines  to reflect these changes in the financial services industry is a welcome change.