Bank Mergers and the 1992 Merger Guidelines: The BankAmerica/Security Pacific Transaction

Bank Mergers and the 1992 Merger Guidelines: The BankAmerica/Security Pacific Transaction 152 JANUSZ A. ORDOVER AND MARGARET E. GUERIN-CALVERT unilateral effects from mergers. A key question for our evaluation of bank mergers during this period was whether and how unilateral effects enter into the pertinent competitive assessment of bank mergers. The release of the 1992 Merger Guidelines offered a convenient context for a re-examination of both the analytical process of market definition and the use of divestitures of bank branches and related assets as proper remedies for concerns about the likely competitive effects of specific mergers. With respect to product market definition in particular, merging parties had increasingly argued that ‘fun- damental changes’ in banking markets, especially in the small business lending area, required similarly fundamental changes in the Division’s approach to market definition. The 1992 Merger Guidelines provided particular insights into the role of sunk costs in assessing market participants as well as new insights into the types of evidence that could be used to define markets and the relevant participants. With respect to divestitures, it seemed that branch divestitures had become somewhat “routinized”, with merging parties proposing branches for divestiture often without much specific connection to the nature and types of divestitures that may have been needed to http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Bank Mergers and the 1992 Merger Guidelines: The BankAmerica/Security Pacific Transaction

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007864431971
Publisher site
See Article on Publisher Site

Abstract

152 JANUSZ A. ORDOVER AND MARGARET E. GUERIN-CALVERT unilateral effects from mergers. A key question for our evaluation of bank mergers during this period was whether and how unilateral effects enter into the pertinent competitive assessment of bank mergers. The release of the 1992 Merger Guidelines offered a convenient context for a re-examination of both the analytical process of market definition and the use of divestitures of bank branches and related assets as proper remedies for concerns about the likely competitive effects of specific mergers. With respect to product market definition in particular, merging parties had increasingly argued that ‘fun- damental changes’ in banking markets, especially in the small business lending area, required similarly fundamental changes in the Division’s approach to market definition. The 1992 Merger Guidelines provided particular insights into the role of sunk costs in assessing market participants as well as new insights into the types of evidence that could be used to define markets and the relevant participants. With respect to divestitures, it seemed that branch divestitures had become somewhat “routinized”, with merging parties proposing branches for divestiture often without much specific connection to the nature and types of divestitures that may have been needed to

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 16, 2004

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