Federal antitrust regulators are working to update their methodology for reviewing bank-merger deals to go well beyond factors such as the number of branches per market and where deposits come from, a Justice Department official said Tuesday.
Jonathan Kanter, assistant attorney general for the antitrust division, said the federal government still has the same interest in protecting competition as it did after a 1963 precedent-setting case involving Philadelphia National Bank. The current bank-merger guidelines were issued by the Department of Justice and the banking agencies in 1995, but he said that the “time is ripe” for updating federal guidelines.
“Bank competition affects people’s pocketbooks and their daily lives,” Kanter said in a speech at the Brookings Institution. “The banking system of today bears … little resemblance to the banking business from 30 years ago.”
Kanter said the classic measure of calculating whether one bank has too many branches in a given market to allow a merger without divesting some of those branches no longer reflects the effects of online banking, as well as other changes to the business.
Regulators will study smaller bank deals as well as proposed mergers from the largest players, he said.
Competition now comes not only from other banks but from financial-technology companies.
“All we’re saying is we’re going to look at all competitive factors,” Kanter said. “Competition occurs in so many ways.”
One recent case where a bank merger failed to win favorable review from regulators was First Horizon Corp.’s
FHN,
deal to be bought by Toronto-Dominion
TD,
bank, which was scuttled in May more than a year after it was announced.
Much of modern case law on antitrust rules stems from a 1963 case in which the U.S. government sued to block Philadelphia National Bank’s merger with Girard Trust Corn Exchange Bank. Antitrust regulations based on that case have not been significantly updated since 1995, Kanter noted.
Also read: First Horizon CEO says the bank ‘never assumed regulatory approval was a given’ in scuttled TD merger
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