Justice Department Approves Capital One-Discover Merger Despite Concerns

The Justice Department has approved Capital One Financial’s proposed $35 billion acquisition of Discover Financial, despite concerns that the merger could breach antitrust regulations.

The American Economic Liberties Project, Americans for Financial Reform Education Fund, National Community Reinvestment Coalition, and Public Citizen have called on regulators to prevent the Capital One-Discover merger, citing concerns under federal antitrust and banking laws.

The coalition sent a letter to the US Department of Justice, Federal Reserve Board, and Office of the Comptroller of the Currency (OCC), urging them to assess the merger's potential anticompetitive effects, its impact on systemic risk, compliance with consumer protection and other regulations and its ability to meet community needs under the Bank Holding Company Act and Bank Merger Act.

It said Capital One relies on the fact that many of its customers are unable to switch credit cards due to their credit scores, allowing the bank to exploit this situation by charging some of the highest interest rates in the country. They warned that if Capital One acquires Discover, it will have even less motivation to compete on the cost of its primary product.

Jesse Van Tol, president and CEO of National Community Reinvestment Coalition, said:  “This merger was a horrible idea for working-class families when it was announced last year, and with rising prices, it’s now an absolute nightmare.”

Despite the concerns, the Justice Department approved the merger after informing other regulators reviewing the acquisition that it did not see enough competition issues to prevent the deal. The Justice Department sent a letter to the Federal Reserve and the OCC, stating it had completed its investigation and found no concerns that justified blocking the merger.