Washington, D.C. — The Bank Policy Institute (BPI) today responded to the request of the Department of Justice (DOJ) for comments on whether the Antitrust Division should revise the 1995 Bank Merger Competitive Review guidelines. In its response, BPI encouraged the Antitrust Division to bring its merger enforcement policy for the banking industry in line with every other industry. This revision is necessary not merely for consistency of approach, but to recognize and incorporate the fundamental changes that have occurred in the banking industry’s competitive landscape since industry guidelines were last issued 25 years ago.
According to Gregg Rozansky, Senior Vice President, Senior Associate General Counsel of BPI, “Revising the DOJ’s approach will be an essential step toward ensuring analytical consistency of merger review across industries and making sure that the banking industry is afforded the same enhanced transparency and updated judgments reflected in the 2010 Horizontal Merger Guidelines”.
In 2010, the DOJ issued updated Horizontal Merger Guidelines but carved out the banking industry, and only the banking industry, from the Department’s otherwise generally applicable merger-enforcement policy. BPI’s letter proposes to apply uniformly the Herfindahl-Hirschman Index (HHI) threshold under which the Department presumes competitive harm from mergers. Specifically, the 1995 Bank Merger Competitive Review guidelines incorporate an 1,800-point-HHI threshold for presuming competitive harm for the banking industry, far below the 2,500 point threshold the DOJ applies to all other industries.
BPI’s letter also outlines changes to the competitive landscape in banking since 1995. These changes include additional competition from the non-banking sector. All four of the largest categories of household debt —mortgages, student loans, auto loans and credit cards — are offered by both bank and nonbank competitors without local retail bank branches, and competition within banking markets has become more aggressive due to the availability of new financial data sources and analytics. The letter concludes that this increased competition should provide the DOJ comfort that upwardly revising the bank HHI thresholds to the thresholds applicable to all other industries will not give rise to consumer harm.
About Bank Policy Institute.
About the Bank Policy Institute. The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.