U.S. Sen. Elizabeth Warren (D-MA) said in a letter to the Bank of New York Mellon acquisition of Northern Trust could violate Antitrust laws.
Warren, the ranking member of the Senate Banking, Housing and Urban Affairs Committee, said in the letter to Bank of New York Mellon CEO Robing Vince, the discussion of its primary competitor would present significant concerns under federal antitrust laws. Additionally, the move could threaten financial stability.
“A combination of this scale appears to be ‘presumptively illegal,’ raising serious antitrust concerns and presenting risks to financial stability given the firms’ dominance in important markets that serve as the plumbing of the financial system,” Warren wrote.
Warren said the acquisition would supercharge financial stability risks by merging one certified Too-Big-To-Fail bank with a borderline Too-Big-To-Fail bank.
“Both BNY and Northern Trust are significant providers of asset custody and administration services that endowments, pensions, mutual funds, and other institutions rely on to safeguard assets, execute and settle trades, collect income, and process payments, among other crucial functions,” she wrote. “Should this potential merger move forward, the combined entity’s estimated custodial services market share would exceed 30 percent and would appear to significantly increase consolidation in this market, as measured by the Herfindahl-Hirschman Index (‘HHI’), by roughly 400 points. A merger that creates a firm with a market share over 30 percent and increases HHI by more than 100 points is presumptively illegal under antitrust law.”
The senator requested BNY to brief the committee on the potential merger.