Crandall Melvin Professor of Law Shubha Ghosh has contributed the opinion article “Why a 1963 bank case should not decide the Paramount/Warner deal” to Fortune.
In the article, Ghosh reviews the landmark Supreme Court ruling in United States v. Philadelphia National Bank (PNB) that blocked two banks from merging. The ruling is being used by the states that sued to intervene in the case in the fight over Paramount’s $110 billion deal to buy Warner Bros. Discovery.
The Court set out an arbitrary rule of thumb, deciding that if a merger gives you about 30% of a market, courts will assume it hurts competition, writes Ghosh. “But, by making up that 30% threshold, the case created the machinery to answer the question Congress wanted to address – whether a merger would substantially lessen competition. If PNB’s 30% market-share threshold is triggered by the states’ narrow market definition, however, it would create a legal presumption of harm the states are counting on to win, even without proving actual consumer damage,” he states.
Ghosh concludes, “Congress should make sure that deals of true national scope get one expert review under one modern standard, the way Europe has done for decades. Until then, Philadelphia National Bank will keep being used as a stand-in for the argument about consumer harm that the states cannot actually make.”