The US Justice Department will fundamentally overhaul its reviews of bank deals and other mergers involving financial services firms, Jonathan Kanter, the agency's top antitrust cop, said at a Semafor event on Monday.
The move has major implications for the financial industry by casting a broader antitrust spotlight onto nonbank players, like "buy now pay later" firms, private equity, private credit, and fintech companies that act as lenders. It would replace the DOJ's existing guidelines, which focus on branch overlap and deposits when deciding whether two banks can merge.
A formal Justice Department announcement is coming "very soon," Kanter said. Informally, the DOJ has already been doing this, he added. "Our analysis has to focus on market realities."
"This isn't about being 'pro' something or 'anti' something else. It's more about calling it as we see it in the market," he added. "I don't see any reason we should treat it differently in the context of banks, than we would any other industry."
The DOJ's guidelines for regulating bank mergers haven't been updated since 1995, when ATM cards were cutting-edge and banks were offering toasters to new customers, Kanter said in New York to a room full of lawyers often hired to defend deals before antitrust regulators. "As a result, it looks at things -- narrowly -- like branch overlaps [and] deposits. I don't believe that is the appropriate, most state-of-the-art, effective way to think about concentration in banking."
It's unclear whether other agencies with oversight over banks, including the Federal Reserve, will change their approach to merger approvals, too.
Alongside Federal Trade Commission Chair Lina Khan, Kanter is at the center of the Biden administration's push to crack down on what they see as anti-competitive behavior in the US. The DOJ last month tallied a win against Google, with a US court siding with the government's claim that the company's search business acted as a monopoly. Pending cases include another one against Google that alleges its advertising business violates antitrust laws and a suit against Apple that argues it has monopolized the smartphone industry. The outcomes of these cases could reshape the American tech landscape.
Under his leadership, the DOJ has also filed lawsuits against "middlemen" companies Live Nation and Realpage, for monopolizing the live concert and rental housing markets, respectively. It is also investigating pharmacy benefit managers over inflated drug costs and market dominance, including UnitedHealth Group for the relationship between its health services arm Optum and its insurance unit, the Wall Street Journal reported.
Both Republicans and Democrats have been supportive of an antitrust crackdown, which has also become a talking point during the presidential campaign.
"I am heartened by the degree to which the broader public believes antitrust is good for society," Kanter said.