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Appeals Court Deals Setback to Largest ATM Network

April 23, 1996

WASHINGTON (AP) _ An attempt by the nation’s largest automated teller network to get even bigger was held up Tuesday by appeals judges concerned the deal could cramp money-machine competition.

In a 2-1 decision, a panel of the U.S. Circuit Court of Appeals criticized the Federal Reserve Board for approving the proposal by owners of the automatic teller network MAC to buy a smaller rival without a hearing.

The merged company would operate 45 percent of Ohio’s automatic teller machines and increase its already-dominant positions in Pennsylvania and Kentucky.

Writing for the majority, Judge Patricia M. Wald criticized the Fed for approving the merger ``without an adequate evaluation and explanation of the public benefits.″

Wald and Judge Karen LeCraft Henderson concluded that the Fed overlooked the ATM giant’s responsibility to demonstrate that the benefits of an acquisition ``would outweigh the possible adverse effects.″

They vacated the Fed’s order and told the Fed governors that ``at a minimum″ they must hold a hearing on the proposed merger.

Melinda Mercurio, spokeswoman for Electronic Payment Services, the banking joint venture that owns the MAC network, said the court’s decision changes nothing ``at this point.″

``They did not say that the (Fed’s) decision was incorrect, simply that more information was needed,″ she said.

The MAC network handles nearly 100 million transactions a month.

The Fed last year approved Electronic Payment Services’ bid to acquire the smaller MoneyCenter network of National City Corp. But another competitor _ Columbus, Ohio-based Money Station Inc. _ contested the action.

If the appeals court’s action doesn’t lead to a reversal of the MAC-MoneyCenter merger, it will at least delay it by half a year or more, said Stephen J. Landes, Money Station’s general counsel.

The dissenting judge, Harry T. Edwards, said the Fed was justified in the way it handled the proposed merger. ``The result here is a wonderful windfall for Money Station and its attorneys, who now get to continue this litigation over nothing,″ he wrote.

MAC counts the machines of MoneyCenter among its 19,400 ATMs, according to Mercurio. In the most recent survey by the industry newsletter Bank Network News, Money Station reported having 4,409 ATMs as of September 1995.

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