Shared Atm Networks—The Antitrust Dimension

• Published date: 01 June 1996
• Date: 01 June 1996
• DOI: http://doi.org/10.1177/0003603X9604100207
• Subject Matter: Article

The Antitrust Bulletin/Summer 1996

Shared ATM

networks-

the antitrust dimension

BY DONALD I. BAKER*

I. Introduction: where have all the networks gone?

399

The automated teller machine (ATM) has become an ever more

important part of the average modern

consumer's

financial life

and, for this reason, presents an ever more pressing set

of

difficult

antitrust questions for networks, financial institutions, and gov-

ernment decision makers, Thirty-three years ago, the Supreme

Court emphasized in its landmark Philadelphia National Bank

decision that convenience and location were key to competition in

the retail banking sector; and

"the

fact that banking is a highly

regulated industry critical to the Nation's welfare makes the play

of competition not less important, but more

SO."1

Today, ATMs are

the key to consumer convenience in banking, and yet it is not at

all

clear

that the Supreme

Court's

Philadelphia National Bank

*Baker &Miller PLLC, Washington, DC.

AUTHOR'S NOTE: Preparedfor Comptroller

of

the Currency's Conference

on Antitrust and Banking Washington, DC, November 16, 1995. Revised

3/12/96.

United States v. Philadelphia National Bank,

374

U.S. 321 (1963).

© 1996by Federal Legal Publications, Inc.

400

The antitrust bulletin

message about the importance

of

competition has gotten through

to the government policy makers and judges who are making deci-

sions about ATM networks.

In the last decade, large and successful ATM networks have

been

created-so

that such names as "MAC," "NYCE," "STAR,"

and "HONOR" have become familiar landmarks in different parts

of the country. Meanwhile, the ATM network alternatives avail-

able in any particular region have continued to become fewer.

Why has antitrust policy been such a

random-and

not partic-

ularly

constructive-factor

as ever more mergers have helped cre-

ate dominant ATM networks in various regions

of

the country?

Natural

monopoly

economics?

Or

just

honest uncertainty

and

indecision?

The

Federal

Reserve

Board

of

Governors

("the

Board") has just told us that "the largest regional networks now

account for 80 percent of all regional ATM network transactions

in

the

United

States"-and

used this as a reason for approving

another network merger.?

Meanwhile, Justice Department

(DOl)

officials have influ-

enced the course of events over the years with what they

have

said,

done

or-more

often-not

done. They have thus left

the

field largely to private plaintiffs, the "private attorneys general"

who are necessarily more interested in winning particular business

battles than in establishing policies and precedents. It is hard to

unearth from the resultant patchwork

of

DOl

press releases

and

Business Review Letters, private complaints, and a few consent

judgments, any very coherent vision

of

the modem ATM network

as a competitor, or of the markets in which networks operate.

Probably

the most serious effort at

illumination

was

entirely

private:

Professor

(and

former

Assistant

Attorney

General)

2Bane One Corporation, et aI., March 6, 1995, at 17 (the

EPS/

National City opinion). On April 23, 1996, the Court of Appeals for the

D.C. Circuit reversed the Board's decision and remanded for further pro-

ceedings.

Money Station Inc. v. Board

of

Governors

of

the Federal

Reserve System, No. 95-1182.