Antitrust Objection Called Unlikely
WASHINGTON - Even though the combination of Chemical Banking Corp. and Manufacturers Hanover Corp. would eliminate a major competitor in the New York market, legal experts say the U.S. Department of Justice is unlikely to raise antitrust objections.
Undaunted, Rep. Henry Gonzalez, D-Tex., chairman of the House Banking Committee, asked Attorney General Dick Thornburgh to launch a full inquiry of the merger's competitive impact.
"It's not the kind of transaction that's going to make New York City a noncompetitive banking market," said Thomas P. Vartanian, a partner with Fried, Frank, Harris, Shriver & Jacobson.
While the total assets of a post-merger Chemical Banking Corp., at $135 billion, would still be dwarfed by Citicorp's $217 billion, it would be a closer and more aggressive local competitor.
Banking lawyers will be watching the Justice Department's reaction closely, because it could set a precedent for dozens of anticipated big-bank mergers.
"Justice is very much concerned with any trend toward bank consolidation, and they want to see that it occurs with due regard for their job, which is preserving competition," said Michael A. Greenspan, an attorney with Thompson & Mitchell.
But if the government is looking for a banking-antitrust test case - an area of litigation that was dormant since the early 1980s - the hotly competitive New York market is unlikely to provide it, experts said.