United States v. Connecticut National Bank

Under the Clayton Antitrust Act (Clayton Act), the government could challenge the consolidation of business entities if such consolidation would substantially lessen competition in a particular line of commerce. Two commercial banks located in Connecticut—Connecticut National Bank and First New Haven National Bank (First New Haven)—sought to consolidate. Commercial banks served clients engaged in business and provided an array of services aimed at businesses such as commercial loans, credit-card plans, trust and investment services, and letters of credit. In contrast, savings banks served individual clients and offered none of the same services except commercial loans although savings banks had $26 million in outstanding loans compared to over $1 billion in outstanding loans for commercial banks in Connecticut. Connecticut National Bank was headquartered in Bridgeport and held 6.2 percent of commercial bank deposits in the state. First New Haven was headquartered 19 miles away in New Haven and held 4.1 percent of commercial bank deposits in the state. The two banks were in direct competition in a small, four-town area, but the banks asserted that they would sufficiently divest themselves of offices in the four-town area to ensure competition would not be substantially reduced. The United States (plaintiff) brought a civil antitrust action against Connecticut National Bank and First New Haven under § 7 of the Clayton Act. The district court found that savings banks and commercial banks were in the same line of commerce because there was some overlap between banking services offered by savings banks and commercial banks. The district court ultimately concluded that the consolidation of Connecticut National Bank and First New Haven would not result in a Clayton Act antitrust violation based on the existing competition among savings banks and commercial banks. The United States appealed.