STEWART, J., dissenting.

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stand how the respondent can be liable to the petitioner for not permitting him a complete monopoly.

3

The Court in this case does more, I think, than simply depart from the rule of reason. Standard Oil Co. v. United States, 221 U. S. 1. The Court today stands the Sherman Act on its head.*

3 See generally Elman, "Petrified Opinions" and Competitive Realities, 66 Col. L. Rev. 625 (1966). "It should be plain why there is a real danger of the abuse of the per se principle by those predisposed to offer mechanical or dogmatic solutions to legal problems. In every antitrust case there are two routes to a finding of illegality: critically analyzing the competitive effects and possible justifications of the challenged practice; or subsuming it under one of the per se rules. The latter route is naturally the more tempting; it is easier to classify a practice in a forbidden category than to demonstrate from the ground up, as it were, why it is against public policy and should be forbidden." Id., at 627.

4 "The Supreme Court shows a growing determination in its antitrust decisions to convert laws designed to promote competition into laws which regulate or hamper the competitive process." Bowman, Restraint of Trade by the Supreme Court: The Utah Pie Case, 77 Yale L. J. 70 (1967).

Syllabus.

UNITED STATES v. THIRD NATIONAL BANK IN NASHVILLE ET AL.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE.

No. 86. Argued December 11, 1967.-Decided March 4, 1968. Third National Bank in Nashville and Nashville Bank and Trust Co., the second and fourth largest banks in Davidson County, Tennessee, merged on August 18, 1964. After the merger the three largest banks had 97.9% of the total bank assets in the county, and the two largest banks had 76.7%. The Government's suit challenging the merger had not come to trial when the Bank Merger Act of 1966 took effect, on February 21, 1966. The Act did not provide antitrust immunity for the merger but did state that courts "shall apply the substantive rule of law set forth" in the Act to pending cases. Section 5 of the Act prohibits approval of a merger whose effect "may be substantially to lessen competition" unless the anticompetitive effects "are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served." The District Court asserted that the Act altered the standards used in determining whether a merger violated §7 of the Clayton Act and § 1 of the Sherman Act and mandated a return to United States v. Columbia Steel Co., 334 U. S. 495 (1948). The court found that Nashville Bank and Trust was a "stagnant and floundering bank," suffering from lack of young and aggressive officers. It held that the merger would not tend substantially to lessen competition and also that any anticompetitive effect would be outweighed by benefits to the "convenience and needs of the community." Held:

1. The Bank Merger Act of 1966 requires de novo inquiry by the district courts into the validity of bank mergers to determine whether the merger offends the antitrust laws, and, if it does, whether the banks have established that the merger is justified by benefits to the "convenience and needs of the community." United States v. First City National Bank of Houston, 386 U. S. 361 (1967). P. 178.

2. The Act, which adopted the language of § 7 of the Clayton Act, "substantially to lessen competition," did not provide a dif

ferent antitrust standard for bank cases, and therefore the District Court applied an erroneous Clayton Act standard to the merger. Pp. 181-182.

3. On the facts of this case, the merger did tend substantially to lessen competition in the Nashville commercial banking market. P. 183.

4. The lower court misapprehended the meaning of the phrase "convenience and needs of the community," and misunderstood the weight to be given the relevant factors in determining whether the anticompetitive effects are "clearly outweighed in the public interest" by the effects on the convenience and needs of the community. Pp. 184-192.

(a) While the District Court noted the increased loan capacity of the merged bank, it was not specific in describing the beneficial consequences thereof to the Nashville community, or in defining the value of such increase, especially as compared with less desirable results of the merger. P. 186.

(b) The District Court's analysis did not explore possible ways of satisfying the community's convenience and needs without merger. It was incumbent on the banks to demonstrate that they made reasonable efforts to solve Nashville Bank and Trust's management dilemma short of merger with a major competitor. P. 189.

(c) The findings of the District Court do not sufficiently establish the unavailability of alternative solutions to Nashville Bank and Trust's problems. Pp. 190-192.

5. The case is remanded so that the lower court can consider again the Act's application to the facts of this merger; and since the District Court heard this case before Houston Bank, supra, was decided, it may wish to consider reopening the record to permit the presentation of new evidence in light of the intervening interpretations of the Act. P. 192.

260 F. Supp. 869, reversed and remanded.

Daniel M. Friedman argued the cause for the United States. On the brief were Solicitor General Griswold, Assistant Attorney General Turner, Richard A. Posner and Barry Grossman.

E. William Henry argued the cause for appellees Third National Bank in Nashville et al. With him on the

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Opinion of the Court.

brief were Paul A. Porter, Dennis G. Lyons, Frank M. Farris, Jr., Edwin F. Hunt and John J. Hooker, Jr. Joseph J. O'Malley argued the cause for appellee Camp, Comptroller of the Currency. With him on the brief were Robert Bloom and Charles H. McEnerney, Jr.

MR. JUSTICE WHITE delivered the opinion of the Court. In this case the United States appeals from a District Court decision1 upholding the merger of Third National Bank in Nashville and Nashville Bank and Trust Company against challenge under § 7 of the Clayton Act. The court below concluded that the merger, which joined the second largest and the fourth largest banks in Davidson County, Tennessee, into a bank which immediately after the merger was the county's largest bank but since has become the second largest, would not tend substantially to lessen competition and also that any anticompetitive effect would be outweighed by the "convenience and needs of the community to be served." We disagree with the District Court on both issues. We hold that the United States established that this merger would tend to lessen competition, and also that the District Court did not point to community benefits in terms of "convenience and needs" sufficient to outweigh the anticompetitive impact.

I.

Like other urban centers in the Southeast, Nashville has grown steadily since World War II in both population and economic activity. Commercial banks, as “the intermediaries in most financial transactions," 2 grew

1 The opinion of the District Court is reported at 260 F. Supp. 869 (D. C. M. D. Tenn. 1966). Its findings of fact and conclusions of law are unreported. Probable jurisdiction was noted at 388 U.S. 905 (1967).

2 United States v. Philadelphia National Bank, 374 U. S. 321, 326 (1963).

Opinion of the Court.

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along with their city. From 1955 to 1964, for example, total assets of all banks located in Davidson County increased from $548,300,000 to $1,053,700,000, an increase of 92.2%. The number of banks hardly changed. Indeed, since 1927 there has been only one new bank in the county, Capital City Bank, and at the time of this merger it had achieved only .9% of the county's bank assets. The other banks at the time of the merger, and their percentage of total bank assets in Davidson County, were First American National, 38.3%; Third National, 33.6%; Commerce Union, 21.2%; Nashville Bank, 4.8%; and three small banks, two of them located in Davidson County towns outside Nashville, .6%, .3%, and .3%.3 The merger before us thus joined one of the three very large banks in Nashville and the one middle-sized bank. Its result was to increase from 93.1% to 97.9% the percentage of total assets held by the three largest banks and from 71.9% to 76.7% the percentage held by the two largest institutions.

The two merging banks played significantly different roles in Nashville banking. Third National was characterized by the Comptroller of the Currency as one of the strongest and best managed banks in the Nation and by the District Court as "strong, dynamic and aggressive.”✦ It had "a history of innovating services or promptly providing new services," a recruitment program at local universities, a continuous audit program, and a legal lending limit of $2,000,000. It had 14 branches at the

3 We cite percentages of total assets for convenience, not because they are alone a valid indication of a bank's market share. The percentages of total deposits and of total loans held by the eight Davidson County banks varied insignificantly from the percentages of total assets. See the District Court's Finding of Fact No. 66. 4260 F. Supp., at 881.

5 Finding of Fact No. 91.