# Jurisdictional Statement — United States v. First National Bancorporation, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_1562%3A04 ## Record - **Collection:** Supreme Court brief - **Document type:** Jurisdictional Statement - **Published:** January 1, 1972 - **Citation:** 405 U.S. 915 ## Text INDEX EPR Per ee sae 1 I ieee, eh x ge A pawn ed a 1 Questions presented |. 2 Statutes involved ..._..... oy eR ee ene 2 Statement .............:. , 4 A. The structure of ising’ in 1 Colorado. 4 | B. The acquiring holding company 5 C. The local geographic market... 7 D. The acquired bank and the structure of banking in Greeley ....... ...... 7 8 K. The proceedings.............. Pie ae ee The questions are substantial ..... oar NS EON dis otek ena eed oe 25 SS SS eee we ye 26 Seta be ae Se ae Oem Oe eee 62 I Nw nc ea pea ates ee ae 63 CITATIONS Cases: Bendix Corp, The (FTC), 3 Trade Reg. Rep. {| 19,288, vacated and remanded on other grounds, The Bendix Corporation v. The Federal Trade Commission (C.A. 6, No. 20,687, October 18, 1971)... .. Me Bn ee 20 Brown Shoe Co. v. United States, 370 U.S. ae ec a icck a ie ee ats 18,24 Ekco Products Co. v. F.T.C., 347 F.2d 745 15 Federal Trade Commission vy. Procter &: Gamble Co., 386 U.S. 568... ... ._.. 15,19 General Foods Corp. v. F.T.C., 386 F.2d 936, certiorari denied, 391 U.S. 919... 15 First National Bancorporation, Inc., In the Matter of the, FRB Order, June 17,1971.. 7 ii Page Cases—Continued United States v. Alcoa, 377 U.8. 271 17 United States v. Bethlehem Steel Corp., 168 F. Supp. 576 25 United States v. Continental Can Co., 378 U.S. 441 15,16 United States v. E. 1. du Pont de Nemours & Co., 353 U.S, 586 18 United States vy. First National Bancorpo- ration, Inc. and the Security State Bank of Sterling, D. Col., C-2754, filed Dee. 2, 1970 7 United States vy. Jos. Schlitz Brewing Co., 253 F. Supp. 129, affirmed, 385 U.S. 37 15 United States v. Kennecott Copper Corp., 231 F. Supp. 95 24 United States v. Kimberly-Clark Corp., 264 F, Supp. 439 24 United States v. Pabst Brewing Co., 384 US. 546 18 United States v. Penn-Olin Chemical Co., 378 U.S. 158 15,19,22 United States vy. Philadelphia National Bank, 374 US, 321 18,22,23,25 United States v. Phillipsburg National Bank, 399 U.S. 350 22,25 United States v. Standard Oil Co., 253 F. Supp. 196 15 United States v. Von's Grocery Co., 384 US. 270 2% United States v. Wilson Sporting Goods Co., 288 F. Supp. 543 15 Statutes: Bank Holding Company Act of 1956, 70 Stat. 134, as amended: §3, 12 U.S.C. 1842 4 § 3(a), 12 U.S.C. 1842(a) 10 iii Page §3(¢), 12 U.S.C. 1842(¢) oe | § 3(d), 12 U.S.C. 1842(d) ; 16 § 11(b), 12 U.S.C. 1849(b) Colorado bank customers of FNB Denver com- sed 48.8% of its total of 250 correspondent cus- ners on that date, and they supplied 69% of the total $67.6 million in interbank deposits held by FNB nver as of that date. At the same time, FNB Denver ‘ried 26 accounts with Wyoming banks, 21 accounts th Nebraska banks, 14 accounts with Montana banks, accounts with North Dakota banks, 11 accounts with msas banks, nine accounts with New Mexico banks 1 nine accounts with banks in Texas. Plaintiff’s argument that areas outside of Colorado yuld be excluded beeause non-Colorado banks obtain ver correspondent services from Denver banks is thout merit. It is conceded that even Colorado banks not normally obtain a ‘‘full package”’ of corres- ndent services from any one Denver bank, and, in y event, we fail to see a relevant distinction between nks which obtain all of the available correspondent ‘vices and those which obtain only some of them. Plaintiff roy have a valid argument in asserting it only Colorado banks can utilize their Denver cor- spondent as a depository for bonds or other collateral ich are required by Colorado law to be posted as 58 | security for deposits of the State Treasurer in Colorado banks. Plaintiff also asserts that only Colorado banks would have a demand for utilizing the expertise of their Denver correspondent for advice on matters peculiar to Colorado law, and that Colorado thus constitutes a substantial geographic submarket. In view of the fact that the effect of this acquisition on competition is insubstantial under either definition of the geographic market, it is unnecessary to make the precise distinction here asserted by the parties. C. Substantiality of the Alleged Foreclosure Effect The parties have not presented evidence from which the substantiality of the alleged foreclosure effect can be precisely determined. Plaintiff contends that the amount of correspondent bank balances are the best measure of the amount of correspondent banking busi- ness done by banks offering such services. However, the evidence is to the effect that the banks themselves use a much more sophisticated and accurate method of aecounting for the correspondent banking transactions in which they engage. FNB Denver, for example, ana- lyzes its larger demand deposit accounts in terms of (1) the income generated by the ‘‘average balance’’ after deducting therefrom the 174% reserve requirement and the ‘‘uncollected funds’’—1.e., funds which have been deposited with FNB Denver, but have not yet been collected and are thus unavailable for investment; and (2) the expenses to be charged against the account for services rendered. If at the end of a quarterly accounting period the analysis reveals a loss, FNB Denver generally bills the customer for the excess charges. If the amount of ‘‘uncollected funds’’ was ; & aa, PRD SA teat ale BMMEL POE Fn 59 a constant percentage of the average balance like the 174% reserve requirement, then the average interbank demand deposit would be an accurate relative measure of the degree of foreclosure. However, the evidence indicates that the proportion of ‘‘uncollected funds’’ allocable to various accounts varies from customer to customer. Thus, the gross average interbank balance is at best a very rough, inaccurate approximation of the amount of correspondent banking business done by banks orfering such services. Based on a comparison of interbank demand balances as an acceptable measure of the degree of foreclosure likely to be effected by the proposed acquisition, the foreclosure effect does not appear to be substantial in the context of the banking industry and the particular submarket here involved, however defined. If FNB Denver were to succeed to all of FNB Greeley’s corre- spondent business in FNB Denver’s ‘‘service area,’’ ” (and it is not certain that it will succeed to all of it), FNB Denver would gain %oths of one percent of serv- ice area correspondent balances. Assuming that Colo- rado is the relevant geographic market, FNB Greeley’s correspondent balances represent only somewhat less than ‘“Acths of one percent of the correspondent bal- ances held by Colorado banks (in all banks).” 12 Major Denver banks have nearly 90% of their sales of bank services to other banks in a service area which includes Colorado, Kansas, Nebraska, New Mexico and Wyoming. 18 According to plaintiff’s statistic, FNB Greeley’s correspondent balances represent 1.2% of all such deposits in the six Denver correspondents from Colorado bauks. This statistic assumes that the market is limited not only to Colorado customers, but to that por- tion of the Colorado customers’ business which remains in Colorado. This percentage, as well, appears to be insubstantial under the cir- cumstances presented by this case. ee 60 We have considered cases cited by plaintiff to the effect that foreclosure of a relatively small percentage of a national retail sales or supply market constitutes substantial lessening of competition. None of the per- centages are as minimal as those involved here.” In any event, a local or regional banking market presents a wholly different competitive situation from a national retail sales or supply market in shoes, chemicals, paper or steel. We are not here dealing with nation-wide giant corporations threatening to take over an entire line of commerce and divide it up between them, and the measure of substantiality must be gauged in the context of the particular industry and market involved. Plaintiff relies on the fact that there is a statewide trend toward bank acquisition which is bound to pro- duce vertical foreclosure in the correspondent banking market relevant here. But most of the evidence of future acquisitions—particularly as concerns Bancor- poration’s participation—is based on proposed acquisi- tions which have either not been approved by the Federal Reserve Board or are presently pending litiga- tion. While we must consider the probable future ef- fects of this particular acquisition, we must not eval- uate the effects of this acquisition by prejudging the merits of pending acquisitions which are not presently before the Court. In sum, we are unable to conclude, in light of the past trend of bank acquisitions up to this point in ™ Brown Shoe Co. v. United States, 370 U.S. 294 (1962) ; United States v. Kimberly-Clark Corp., 264 F. Supp. 439 (N.D. Cal. 1967) ; United States v. Kennecott Copper Corp., 231 F. Supp. 95 (S.D.N.Y. 1964) ; United States v. Bethlehem Steel, 168 F. Supp. 576 (S.D.N.Y. 1958). 61 time, or considering the possible future acquisitions, that the minimal amount of foreclosure which would result from this acquisition constitutes a substantial lessening of competition within the meaning of Section 7 of the Clayton Act. To hold otherwise would serve to automatically preclude an acquisition in any instance in which a correspondent relationship had existed or was even potential. CONCLUSION Having concluded that the government has failed to sustain its several allegations that the acquisition in question has the effect substantially to lessen com- petition, or to tend to create a monopoly in a line of commerce in a section of the country as required by Section 7 of the Clayton Act, it follows that the re- quested relief must be denied and that the complaint and cause of action must be dismissed. It is so ordered. The Court’s findings and conclusions are contained in this opinion, and hence formal findings and conelu- sions are dispensed with. The government is granted a stay of proceedings for 30 days. During this period the statutory injunction will remain in force. DATED at Denver, Colorado, this 12th day of July, A.D. 1971. By THE Court: /s/ William E. Doyle WiuiM E. Doy eg, Judge APPENDIX B In THE Unttep States District Court FOR THE District oF CoLORADO UNITED StTaTes OF AMERICA, PLAINTIFF, v. THE First NationaL Bancorpo-} RATION, INc. AND THE First Na- TIONAL BANK OF GREELEY, DEFENDANTS. Filed, Aug. 27, 1971, G. WaLtER Bowman, Clerk. ORDER In accordance with the oral opinion rendered by this Court on August 9, 1971, after hearing, regarding the disposition of Plaintiff’s Motion to Re-Open the Rec- ord, to Make Additional Findings of Fact and to Amend the Judgment, dated July 22, 1971, and Plain- tiff’s Motion to Extend the Statutory Stay, dated August 3, 1971; Ir Is Heresy OrpERED that the aforesaid Motion to Re-Open the Record, etc. is denied. /s/ William EK. Doyle United States District Judge Civil Action No. C-2413 | Dated: Approved as to form: /s/ Herbert G. Schoepke Attorney, Department of Justice Attorney for Plaintiff Metzcer, Scowarz, McKenna & KEMPLER By: Carl W. Schwarz A Member of the Firm Attorneys for Defendants (62) — APPENDIX C In THE Untrep States Districr Court FOR THE DIstTRICT OF COLORADO Unrrep States oF AMERICA, PLAINTIFF, se Civil Action First NATIONAL BANCORPORATION, ? No. C-2413 Inc. AND THE First NATIONAL BANK OF GREELEY, DEFENDANTS. NOTICE OF APPEAL TO THE SUPREME COURT OF THE UNITED STATES BY THE UNITED STATES OF AMERICA Notice is hereby given that the United States of America, plaintiff herein, appeals to the Supreme Court of the United States, under the Expediting Act, 15 U.S.C. Section 29, from the judgment entered July 12, 1971, dismissing the complaint in this action, which became final upon entry of the order of August 27, 1971, denying the timely motion of the plaintiff, United States, to re-open the record, make additional findings of fact and conelusions of law, and grant the relief re- quest in the complaint as amended. James L. TREECE United States Attorney /s/ Carolyn J. MeNeill By Caro.yn J. MCNEILL Assistant U. S. Attorney 323 U.S. Courthouse Denver, Colorado 80202 Howarp E. SHaprro HERBERT G, SCHOEPKE Attorneys Department of Justice Anti-Trust Division Washington, D.C. 20530 ve U.S. Government Printing Office: 1971—449-504/290 (63) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_1562%3A04. Public record. Not legal advice.