
377 Mich. 481 (1966)
141 N.W.2d 73
ATTORNEY GENERAL, ex rel. STATE BANKING COMMISSIONER,
v.
MICHIGAN NATIONAL BANK.
GRAND LEDGE STATE BANK
v.
STATE BANKING COMMISSIONER.
Calendar Nos. 20, 21, Docket Nos. 51,036, 51,037.
Supreme Court of Michigan.
Decided April 5, 1966.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Maurice M. Moule and Maxine Boord Virtue, Assistant Attorneys General, for State Banking Commissioner.
Fraser, Trebilcock, Davis & Foster and Butzel, Eamon, Long, Gust & Kennedy (Victor W. Klein and Harold A. Ruemenapp, of counsel), for Michigan National Bank.
Hudson E. Deming, for Grand Ledge State Bank.
Louis E. Wirbel (Miller, Morris & Pappas, of counsel), for Loan & Deposit State Bank.
*486 T.M. KAVANAGH, C.J.
On the relation of the banking commissioner, the attorney general sought by quo warranto to prevent the Michigan National Bank, the main office of which is in Lansing, from purchasing the assets and assuming the liabilities of the two Grand Ledge State banks, which banks thereupon were to be liquidated and a branch or branches of the Michigan National Bank established in Grand Ledge. The attorney general alleged that such transactions would create a monopoly contrary to State law,[1] in the banking business in the Grand Ledge service area.
The two Grand Ledge State banks filed a complaint against the banking commissioner seeking to set aside the commissioner's order of March 10, 1964, refusing to approve the sales, purchases, and liquidation of the two banks by arrangement with the Michigan National Bank. The cases were consolidated for pretrial and trial, since they involved the same factual transactions and issues.
Following trial, the circuit court found as a matter of fact that: the growth of the two Grand Ledge State banks over the past five years was substantially less than other banks in the area; one of the banks had an acute management succession problem; neither bank had the trained personnel necessary to offer modern banking services to the community, such as Federal Housing Administration (FHA) and Veterans Administration (VA) loans or trust department services; an increase of the interest rate to four per cent (which many banks were already paying) would present serious financial difficulties to both banks; both banks, due to increased competition from credit unions, building and loan associations, and insurance companies were experiencing grave difficulties in procuring sufficient high-yield *487 loans; and the proposed transactions resulted from good faith, open, competitive bidding between Michigan National Bank and another Lansing bank, the American Bank & Trust Company.
In addition to these facts, from which the trial court found not only economic necessity but a lack of modern banking facilities in Grand Ledge, it should be noted that the city of Grand Ledge attempted to intervene as a party defendant in the attorney general's suit in order to show that the city of Grand Ledge was not adequately served by the two State banks and that the proposed sale and liquidation would benefit the city of Grand Ledge. The comptroller of currency of the United States in approving the acquisition of the assets and assumption of the liabilities of the banks by the Michigan National Bank stated: "While consummation of this proposal [and operation of the State banks' offices in Grand Ledge as branches of the Michigan National Bank] will have no significant consequences in the city of Lansing, it will produce marked benefits for the public in the Grand Ledge area."
The trial court concluded that section 26 of the Michigan financial institutions act[2] announces a public policy that a community of less than 6,000 is better served by only one bank or branch, and that section 26 should be read in connection with the antimonopoly laws of the State. Judgment was entered accordingly and plaintiff attorney general for himself, and in the companion case on behalf of the defendant banking commissioner, appealed.
The questions at issue are: (1) whether the acquisition of the assets and assumption of liabilities of the two Grand Ledge State banks, the operation of their offices as branches of the Michigan National Bank, and alleged resulting monopolization of the *488 banking business in the Grand Ledge market area by Michigan National Bank is a violation of the Michigan antimonopoly laws, or alternatively, whether the purchases and alleged resulting monopolization by Michigan National Bank is justified by economic necessity; (2) whether the acquisition of the assets of the two Grand Ledge State banks and the asserted resulting monopolization of banking business in the Grand Ledge market area by Michigan National Bank were justified by the legislative policy declaration in section 26 of the Michigan financial institutions act; and (3) whether the Michigan banking commissioner was justified in refusing to approve sale of the assets of the two Grand Ledge State banks to the Michigan National Bank because of the personal interests of the officers of the two State banks therein and because of the alleged monopolistic nature of the transaction.
The attorney general claims that the result would constitute an illegal monopoly under the Michigan antimonopoly laws simply because Michigan National Bank would thereby obtain roughly 92% of all the banking business in the city of Grand Ledge and a 5-mile area surrounding it, which has been stipulated to be the market area for the purposes of this case.
In order to determine what a monopoly is, we must turn to the definitions of the courts. The Michigan Supreme Court, quoting United States v. American Tobacco Co. (CC SD NY) 164 F 700, 721, has approved the following definition of a monopoly:
"`A monopoly, in the modern sense, is created when, as a result of efforts to that end, previously competing businesses are so concentrated in the hands of a single person or corporation, or a few persons or corporations acting together, that they have power to practically control the prices of commodities and thus to practically suppress competition.'" *489 Attorney General, ex rel. James, v. National Cash Register Co., 182 Mich 99, 107 (Ann Cas 1916D, 638); People, ex rel. Attorney General, v. Detroit Asphalt Paving Co., 244 Mich 119, 122, 123.
In Peoples Savings Bank v. Stoddard (1960), 359 Mich 297, 329 (83 ALR2d 344), this Court said:
"Monopoly may be said to be the result of the practical elimination of effective business competition which thereby creates a power to control prices to the harm of the public."
1 CCH Trade Reg Rep (1965), par 1530, Geographic and Product Market, says:
"The existence of monopoly power is determined in the light of the market involved, that is, the relevant market."
Although it was once thought by some that banking could not be the subject of a monopoly (5 Toulmin's Anti-Trust Laws, Banking [Anderson ed 1950], § 2.1, p 57), this is not the prevailing view and in Michigan since 1960 banks have been held subject to the State's antimonopoly laws. Peoples Savings Bank v. Stoddard, supra. However, once banks are subjected to antimonopoly regulation, one must determine just what is the relevant market area of any banking community.
To determine "market area" we may again turn to the Supreme Court's definition. The United States Supreme Court in United States v. Philadelphia National Bank (1963), 374 US 321, 359 (83 S Ct 1715, 10 L ed 2d 915), used the following test in a case involving violation of the Federal antitrust laws:
"Therefore, since, as we recently said in a related context, the `area of effective competition in the known line of commerce must be charted by careful *490 selection of the market area in which the seller operates, and to which the purchaser can practicably turn for supplies,' Tampa Electric Co. v. Nashville Coal Co., 365 US 320, 327 (81 S Ct 623, 5 L ed 2d 580)." (Emphasis supplied.)
The court held that the relevant market area was the four-county area around Philadelphia. In support of the concept that the relevant market in regard to banking can be quite small, the Supreme Court of the United States has determined that the relevant area can be confined to one county.
"We also agree with the district court that the consolidation should be judged in light of its effect on competition in Fayette county. The record establishes that, here, as in United States v. Philadelphia National Bank, * * * the `factor of inconvenience' does indeed localize banking competition `as effectively as high transportation costs in other industries.'" United States v. First National Bank & Trust Co. of Lexington, 376 US 665, 668 (84 S Ct 1033, 12 L ed 2d 1).
In Peoples Savings Bank v. Stoddard, supra, the Michigan Supreme Court, without discussing the problem, applied the antimonopoly statute to one city, Port Huron, with a population of 35,000.
In the case at bar, the admitted relevant market area is the city of Grand Ledge and the immediate area within a radius of 5 or 6 miles with a population of 10,340. If the proposed sale and liquidation of the two State banks are approved, upon commencement of business in the offices of the State banks as branches Michigan National Bank will have acquired over 90% of the banking business in the Grand Ledge area.
The Michigan Supreme Court has adopted the "rule of reason" in applying antitrust and antimonopoly statutes. Hubbard v. Miller, 27 Mich 15 *491 (15 Am Rep 153); Staebler-Kempf Oil Company v. Mac's Auto Mart, Inc., 329 Mich 351; People, ex rel. Attorney General, v. Detroit Asphalt Paving Co., 244 Mich 119.
"Some State courts and the lower Federal courts early reached the conclusion that the various acts applied to all transactions which in any way operated in restraint of trade, in reduction of competition, whether direct or incidental, reasonable or unreasonable, and the Federal Supreme Court gave color and encouragement to such construction. But such a construction could not long last unless all business was to be put in a strait-jacket. Two grocerymen in a small town could not combine their stocks in one store and form a partnership without lessening competition, and thus violating the antitrust law of the State if such construction obtained. A county newspaper could not buy out its competitor without becoming amenable to the law. Illustrations could be multiplied." People, ex rel. Attorney General, v. Detroit Asphalt Paving Co., supra, p 123.
Therefore, it is not every combination which restrains trade or tends to reduce competition that is illegal; only those which are unreasonable.
In the Lexington bank case, the Supreme Court of the United States, quoting United States v. Columbia Steel Co., 334 US 495, 527 (68 S Ct 1107, 92 L ed 1533), set forth several tests to determine unreasonable restraint:
"`In determining what constitutes unreasonable restraint, we do not think the dollar volume is in itself of compelling significance; we look rather to the percentage of business controlled, the strength of the remaining competition, whether the action springs from business requirements or purpose to monopolize, the probable development of the industry, consumer demands, and other characteristics of *492 the market.'" United States v. First National Bank & Trust Co. of Lexington (1964), 376 US 665, 675, 676 (84 S Ct 1033, 12 L ed 2d 1).
And in Peoples Savings Bank v. Stoddard, supra, where defendants' purpose was regarded to be of prime significance to decision, this Court said (pp 329, 330):
"An agreement or scheme, the manifest object of which is to acquire control over a competitor through its capital stock for the purpose of extinguishing competition, is per se in violation of the antimonopoly laws [citing cases]."
In examining any combination, the overriding test, of course, is protection of the public interest. "But not every joinder of competing businesses or acquisition of instrumentalities that have been used in competition is an undue restraint of trade or a creation of a monopoly. Each situation must be measured by the rule of reason. And a fundamental test is injury to the public." 10 Fletcher, Corporations (1961 Rev), § 5003, p 1061.
In the information as amended, the attorney general charged that Michigan National Bank had for a considerable period of years been pursuing a plan or scheme in combination with various other persons to monopolize or attempt to monopolize the business of banking in numerous sections of the State of Michigan, and that the acquisition of the two Grand Ledge banks was in furtherance of such plan or scheme. In the proofs adduced at trial, the attorney general limited himself to an attack on the legality of the proposed liquidation and sale of assets of the Grand Ledge banks and failed to argue or prove a general intent, plan or scheme, alone or otherwise, to monopolize on the part of Michigan National Bank. At trial and here on appeal, the proposed acquisition of the banks was treated as *493 an isolated transaction, apart from any general attempt on the part of Michigan National Bank to monopolize the banking business in the State of Michigan.
In the findings of fact supported by the record, the lower court found that the sale and purchase of the assets of said banks were the result of open and competitive bidding between Michigan National Bank and American Bank & Trust Company. Finding no purpose or intent to monopolize and no unlawful or illegal tactics or means employed by Michigan National Bank, the lower court held that the transaction did not violate the antimonopoly laws of the State of Michigan.
There is evidence to support the trial court's finding that the Grand Ledge State banks did not have sufficient trained personnel to offer modern banking facilities, such as FHA or VA loans or trust department services.
Although the sale and liquidation will result in Michigan National Bank acquiring over 90% of the banking business of the Grand Ledge area, we believe no violation of the State's antimonopoly laws was established, since the transaction was founded not only on economic necessity and the need in the Grand Ledge community for modern banking facilities, but was the result of open, competitive bidding.
In addition, it should now be evident that the case of Peoples Savings Bank v. Stoddard, supra, is distinguishable on its facts since in that case the Court dealt with "a story of high finance and less lofty subterfuge" (p 306), in which there was no economic necessity present and the purpose of defendants was found to be the elimination of "its only general banking competition" in Port Huron (p 330). In Stoddard, this Court found (p 337) that "the circuit judge was correct in holding that the plan he found established by the testimony was an illegal *494 conspiracy." Unlike the case before us, the Court could find no justification for the elimination of all competition in the Port Huron banking area except to achieve monopoly power for defendants.
Since we agree with the trial court that sale of the two Grand Ledge State banks, measured by the rule of reason, would not violate the State antimonopoly laws, it is not necessary to decide whether section 26 of the Michigan financial institutions act is a valid defense to prosecution for violation of the Michigan antimonopoly statutes. See, in this regard, Peoples Savings Bank v. Stoddard, supra, pp 331-333.
Similarly, in view of our holding it is not necessary to decide whether the banking commissioner was justified in refusing to approve the sale of assets of the two banks on the ground that the transactions were monopolistic.
Finally, the banking commissioner also refused to approve the sale because of "this intrigue, the questionable tactics." The commissioner admitted that by "this intrigue" he was referring to the fact that certain principal officers had been promised significant individual rewards. These questionable tactics consisted of participation in a pension plan and membership on an advisory board of directors.
However, there was evidence showing that the American Bank & Trust Company, in the course of competitive bidding, offered equivalent salary, pension, and employment arrangements in its proposal. Furthermore, the stockholders of both State banks voted approval of the sale and liquidation with full knowledge of the proposed pension plans and salary arrangements.
The trial court concluded that the board of directors of both State banks and the stockholders acted in good faith in agreeing to sell to Michigan National *495 Bank, that there were no unlawful or improper tactics or means employed by Michigan National Bank to purchase the assets of said banks, and that the purchase was the result of open and competitive bidding between Michigan National Bank and American Bank & Trust Company.
Great weight is given to the fact findings of the trial judge because of the opportunity of the judge to see the witnesses testify and observe their demeanor on the stand. We do not, under GCR 1963, 859,[3] reverse the judgment of the trial court unless it appears to this Court to be "clearly erroneous."
We find the trial court's findings, as to the issues of fact, in this case are supported by the evidence and not clearly erroneous and, therefore, affirm its judgment that, on the facts in this case, the proposed sales and liquidation did not constitute a monopoly contrary to State law, and that the banking commissioner acted unreasonably in refusing to approve the sale of the assets of the two Grand Ledge State banks to the Michigan National Bank.
No costs, a public question being involved.
DETHMERS, KELLY, SOURIS, SMITH, and O'HARA, JJ., concurred with T.M. KAVANAGH, C.J.
ADAMS, J. (concurring).
I concur in the result reached by Chief Justice T.M. KAVANAGH for the following reasons:
The Grand Ledge State Bank and the Loan & Deposit State Bank established that, as a matter of economic necessity, they had to either merge, sell out, or liquidate.
Section 26 of the banking act (CL 1948, § 487.26 [Stat Ann 1957 Rev § 23.754]) requires that in a *496 city or township of less than 6,000 there shall be only one bank.
Section 26 was prospective from the date of enactment. It does not apply to 18 cities (including Grand Ledge) with populations of less than 6,000, where two banks were in existence at the time section 26 was enacted. There are presently, however, 400 cities or townships in Michigan with less than 6,000 population that have only one bank. Section 26 clearly makes it the public policy of this State that there be only one bank in small cities or townships. It would be fully applicable to Grand Ledge upon the dissolution or liquidation of one or both of the banks existing in that community.
The parties to this case agreed that the banking business is very localized and that the relevant market area here involved is the city of Grand Ledge and not to exceed five miles around it. The proposition that banking is a localized business, if controverted, might be subject to searching scrutiny;[*]*497 but since it is not, we must accept it for purposes of this case.
Once it is established that a local monopoly (due to the nature of the banking business) is authorized by virtue of section 26, and that liquidation of one or both of the Grand Ledge banks was an economic necessity, the question becomes  Who is to be permitted to carry on that local, legally sanctioned monopoly? I agree with Chief Justice T.M. KAVANAGH that this was a matter for open, competitive bidding by any interested party. The Grand Ledge banks had three alternatives  (1) to merge with each other; (2) to sell to the American Bank & Trust Company; (3) to sell to Michigan National Bank. Each alternative was carefully and exhaustively explored. *498 Only after it was determined by the boards of directors and the stockholders of the Grand Ledge banks that the Michigan National Bank offer was the most attractive was that offer accepted. As a result of this competitive bargaining, the stockholders of the Grand Ledge banks will receive an attractive price for their stock, the employees of both banks will be assured continued employment and other benefits, the officers will receive attractive retirement plans in return for continued service and advice, and the community of Grand Ledge will be afforded adequate banking services in a modern facility.
The only quid pro quo established to Michigan National Bank for this is a local monopoly permitted under section 26. If this acquisition by Michigan National was in furtherance of an illegal and unlawful monopoly outside of the local area, there was a failure of proof to that effect.
BLACK, J., did not sit.
NOTES
[1]  CL 1948, §§ 445.701-445.712; 445.761-445.767 (Stat Ann 1962 Rev §§ 28.31-28.39; 28.61-28.67).
[2]  CL 1948, § 487.26 (Stat Ann 1957 Rev § 23.754).
[3]  373 Mich lxxxix.  REPORTER.
[*]  "It is clear that just as the antimonopoly act [CL 1948, §§ 445.701-445.712; 445.761-445.767 (Stat Ann 1962 Rev §§ 28.31-28.39, 28.61-28.67)] contained no specific exemption as to banking, neither does the Michigan financial institutions act [CL 1948, § 487.1 et seq. (Stat Ann 1957 Rev § 23.711 et seq.)] contain a specific exemption as to monopoly. The addition of such exemption, if consistent with legislative intent, is so simple and so much to be expected, that the omission seems to us of great significance in determination of this issue.

"Nor does our examination of the scope of the Michigan financial institutions act uphold the `comprehensive' argument advanced to us by defendants. For example, the power vested in the banking commissioner by sections 99 and 112 of the Michigan financial institutions act (CL 1948, §§ 487.99, 487.112 [Stat Ann 1957 Rev §§ 23.852, 23.865]) appears to be the examination of the proposed liquidation for the purpose of protecting depositors and creditors. If the public is protected from the sort of monopolistic practice in banking demonstrated in this case, the protection is not to be found in the Michigan financial institutions act.
"Defendants likewise argue with vehemence that in many other situations under express authority of the banking commissioner and authorization of the Michigan financial institutions act, 1-bank cities have been created or are being maintained in Michigan. We have no doubt that the Michigan financial institutions act has established, as a matter of State policy, a concern for the stability and economic soundness of the banks in the State. These considerations have in some situations been placed above the maintenance of free and unlimited competition. We recognize, too, this State policy must be read in conjunction with any application of the antimonopoly law to banking.
"The purpose, however, is to protect the public against imprudent banking, not `to deter competition or foster monopoly.' Moran v. State Banking Commissioner, 322 Mich 230, 243.
"What prevents the application of this argument to this case is the fact that Port Huron was supporting, and obviously could continue to support, 2 general banking institutions. This was not a liquidation founded on economic necessity or demanding State approval on grounds of protection of depositors or creditors of any bank.
"Nor do we have before us any fact situation presenting the question of creation of monopoly through voluntary merger of previously competitive banks with banking commission approval under procedures established by the Michigan financial institutions act. While declining to pass on an issue clearly not before us, we note that if there are, or have been, other unrestrained violations of the antimonopoly laws, this fact could be of no benefit to defendants. Society of Good Neighbors v. Mayor of Detroit, 324 Mich 22; Attorney General, ex rel. James, v. National Cash Register Co., 182 Mich 99 (Ann Cas 1916D, 638).
"Repeals by implication are generally not favored. Washtenaw County Road Commissioners v. Public Service Commission, 349 Mich 663; People v. Buckley, 302 Mich 12; Edwards v. Auditor General, 161 Mich 639. And we find nothing in the history or language of these 2 pieces of legislation to support an argument of legislative intention of implied repeal.
"We hold that the Michigan financial institutions act did not either expressly or by implication exempt banking from the operation of the Michigan antimonopoly laws." Peoples Savings Bank v. Stoddard, 359 Mich 297, 331-333 (83 ALR2d 344).
