Vanderbilt Law Review

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In United States v. Philadelphia Nat'l Bank,' the Supreme Court enjoined a proposed merger of the second and third largest commercial banks in Philadelphia. The Court held, inter alia, that section 7 of the Clayton Act 2 applied to bank mergers, and that the merger in question might substantially lessen competition. Central to the reasoning of the majority was the premise that an unchecked trend toward concentration of market power in commercial banking is contrary to the public interest in maintaining competition among existing commercial banks. Since commercial banking had traditionally been considered exempt from section 7 prosecution, the cry for legislative response was immediate. The 1966 amendment to the Bank Merger Act of 1960 reflects the congressional reaction. The amendment attempts to reconcile the judicial application of section 7 with the standards applied by the federal banking agencies in evaluating merger applications under the 1960 act. It is anticipated that this reconciliation will develop from the establishment of a single set of standards against which future merger applications may be measured. These standards are applicable to "the banking supervisory agencies, the Department of Justice, and the courts under the antitrust laws." This note, by combining legal analysis of the amendment with pertinent economic considerations, will attempt to evaluate the effectiveness of the legislation and expose those areas which require more intensive congressional consideration.