Letter to DOJ on the Bank Merger Guidelines Review

United States Department of Justice
Antitrust Division
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Ladies and Gentlemen:
The American Bankers Association (ABA) appreciates this opportunity to provide additional views of our members to the Department of Justice Antitrust Division (Division) during its review of the 1995 Bank Merger Competitive Review Guidelines (Banking Guidelines). ABA's members comprise the entire range of the US banking industry and compete vigorously in diverse product and geographic markets to serve their customers. As noted in ABA's 2020 Response, preserving this diversity and enhancing delivery of financial services to the national economy is a central concern of both our industry and our nation’s public policy.

ABA continues to believe that a review of the Banking Guidelines, whose current form is now 25 years old, is important to the health of the US financial system and economy. In the intervening years, the market for financial products and services has undergone tremendous change, thanks to the rise of both availability and use of online banking, the interstate expansion of bank branch networks, enhanced market access made possible by advertising and communication innovations, and the increased market presence of nonbank financial firms, including "fintechs."

As noted in our 2020 Response, because of these significant changes in the financial services market, the current Banking Guidelines fail to account for significant competition in many product lines, including in many rural markets. More generally, we refer the Division to that submission for a more extensive discussion of its key points:

• Joint guidance adopted by both the Division and the Federal banking agencies is very useful because it is based on a consistency in approach of the agencies having jurisdiction over analysis of competitive impacts of mergers.
• Reconciliation of conflicting standards between the Banking Guidelines and the more general Horizontal Merger Guidelines is necessary and appropriate. More specifically, in 2010 the Division (and the Federal Trade Commission) raised the concentration threshold from which competitive harm was presumed for every industry except the banking industry. In addressing this conflict, the Division should raise to 2500 the threshold of the Herfindahl-Hirschman Index (HHI) below which the Division would generally not challenge proposed mergers or require divestitures of branches or other operations, consistent with the threshold currently applicable to all other industries under the 2010 Horizontal Merger Guidelines.
• Competitive impact analysis should take into account financial services provided to a market through channels other than branch networks, and by nonbank firms 
  • Online delivery of financial services by banks without a branch presence, including online mortgage companies and other online lending services;
  • Money-market funds (which are direct competitors for bank deposits);
  • Farm Credit System institutions, thrift institutions, and credit unions; and 
  • Fintechs and other nonbank firms, which frequently unbundle financial services traditionally provided by banks through physical branches.

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