FTC urged to exempt FCUs from premerger notice

October 13, 2010

FTC urged to exempt FCUs from premerger notice

NAFCU on Friday urged the Federal Trade Commission to consider exempting credit union mergers subject to NCUA approval from its premerger notification requirements.

The FTC currently subjects credit unions to the premerger notification requirements set under the Hart-Scott-Rodino Act. The notification serves federal antitrust laws, but NAFCU President Fred Becker, in a letter Friday to FTC Commissioner Julie Brill, noted that NCUA-approved mergers of federal credit unions are unlikely to violate such laws regardless of how the market may be defined.

Becker said premerger notifications currently cost credit unions from $45,000 to $280,000 where the size of the transaction exceeds $63.4 million. This plus the legal costs in satisfying the rule can be prohibitive to the potential merger of credit unions, which are not-for-profit and are barred from raising capital from sources other than retained earnings.

The FTC is permitted by the Hart-Scott-Rodino Act to provide a regulatory exemption from premerger notification where mergers are not likely to violate antitrust laws. The statute also explicitly exempts from the requirement mergers between depository institutions that require approval of federal bank and thrift regulators.

The statutory exemption for banking-agency-reviewed merger requests requires an analysis of potential antitrust concerns, but Becker said it is not "necessary or advisable" to apply such a rule to credit unions given their not-for-profit nature and their mission to provide low-cost alternative financial services and products to members.

NAFCU also favors a statutory exemption, but "we strongly recommend" that FTC use its current authority to establish a similar result by regulation, Becker wrote. "We believe parity on this issue is important and should be granted."

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