This short paper reviews the recent anti-trust analysis of banking mergers as well as recent decisions by the Department of Justice and the Bundeskartellamt (in the last few months). We analyse the proposed merger between UBS and SBC in light of this evidence and focus on the domestic retail banking. Three conclusions stand out : - There is overwhelming evidence that the relevant market for some products is local. In particular, the market for loans to small and medium size enterprises should be considered as a local market and this has consistently been the practice of both the US and German authorities. - Barriers to entry in retail banking are significant so that high concentration should be a source of concern. This concern is reflected in recent decisions on bank mergers by the Department of Justice. By the standards of the US practice, the concentration resulting from the UBS-SBC merger would be simply unacceptable and by a wide margin. - Divestiture is the most common remedy in banking and it seems to be effective. Given the concentration entailed by the proposed merger, nothing less than a the full divestiture of one retail network seems adequate.
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Find related papers by JEL classification: L40 - Industrial Organization - - Antitrust Issues and Policies - - - General L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
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