ABA to DOJ: Revisit Geographic Definitions in Bank M&A Competition Guidelines

The American Bankers Association today urged the Department of Justice to reexamine how it defines geographic markets in its guidelines for reviewing competitive effects of bank mergers and acquisitions, saying they currently “fail to account for significant competition in many product lines, especially in many rural markets.”

Different analyses of geographic data, such as that reported under the Home Mortgage Disclosure Act or the Community Reinvestment Act, show that customers will often travel farther within rural markets to obtain financial products and services than the current geographic market definitions assume, ABA wrote in a comment letter to DOJ. “These data, therefore, provide insight into the actual degree of concentration in a market and thus the competitive landscape that would exist following a proposed merger.”

The current definitions—virtually unchanged since 1995—frequently fail to take into account how customers in those markets actually seek and obtain banking services, ABA wrote. “In the intervening years, the market for financial products and services has undergone tremendous change, thanks to the rise of online banking [and]the interstate expansion of bank branch network.”

ABA urged DOJ to ensure that competition analysis under the guidelines encompasses the full range of financial services providers in a given market. “Lending activities of the Farm Credit System institutions, thrifts, and credit unions are specific areas of concern and at a minimum any revisions to the banking guidelines should take full account of these market activities,” ABA added.