At a Brookings Institution event on June 20, Assistant Attorney General Jonathan Kanter, a top antitrust official for the U.S. Justice Department (DOJ or Department), announced that the Department will reassess its approach to bank merger enforcement given current market realities. Specifically, the Department will assess whether the factual and economic assumptions underlying its 1995 Bank Merger Guidelines are adequate to measure today’s competition.

Kanter’s remarks took place against the backdrop of discussing the lasting impact of the U.S. Supreme Court’s 1963 decision in United States v. Philadelphia National Bank, which held that that the merger of the second and third largest banks in Philadelphia violated section 7 of the Clayton Act because the merger would likely lessen competition. Following the Supreme Court’s decision, Congress codified the Department’s role in bank antitrust enforcement under the Bank Merger Act and the Bank Holding Company Act. As a result, the DOJ is required to provide banking agencies with a report on the competitive factors involved in a bank merger and is authorized to legally challenge any bank merger that violates antitrust law.

According to Assistant Attorney General Kanter, “[o]n this milestone anniversary of Philadelphia National Bank, it is appropriate to take stock of how the [D]epartment is fulfilling its statutory role in bank merger enforcement.” For instance, the DOJ and federal banking agencies issued Bank Merger Guidelines in 1995. According to Kanter, much has changed since the guidelines were issued.

Taking these changes into account, Kanter proposed several ways that the DOJ intends to revamp its required competitive factors reports. It will assess the relevant competition in retail banking, small business banking, and large- and mid-size business banking to include consideration of concentration levels across a wide range of metrics and not just local deposits and branch overlaps — and the DOJ is working with the federal banking regulators on new data sources to support this revamped analysis. The DOJ will also closely scrutinize mergers that threaten to “entrench power” by excluding existing or potential rivals. The Antitrust Division will also carefully consider how a proposed merger may affect competition for different customer segments. Kanter stated, “For example, some banks specialize in relationship lending and personalized service, leveraging their unique knowledge of their local communities. Other banks operate extensive regional or nationwide branch networks and offer sophisticated mobile banking capabilities … To protect competition, antitrust enforcers must ensure that customers retain a meaningful choice as to the type of bank with which they do business by recognizing that different segments of customers have different needs and that substitution across different types of banks may be limited.”

Assistant Attorney General Kanter concluded his remarks by committing to collaborating with the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency on new bank merger guidelines, stating “As we stare down the realities of our financial system in 2023, the time is ripe for us to revisit the Bank Merger Guidelines to make sure that we are applying the legal holdings and principles of Philadelphia National Bank and its progeny in a manner that is consistent with modern market realities.”

Although Assistant Attorney General Kanter repeatedly emphasized the need to update the Bank Merger Guidelines, he did acknowledge that such regulatory guidance is not — and does not — take the place of law. Rather, existing law and precedents like Philadelphia National Bank remain the ultimate touchstone for regulators and banks. Consequently, the Department plans to anchor any revisions to the Bank Merger Guidelines in binding precedent and statutory text.