DOJ Signals Possible Green Light for Capital One’s $35.3 Billion Discover Merger

The U.S. Department of Justice (DOJ) is reportedly leaning toward allowing Capital One’s $35.3 billion acquisition of Discover Financial Services, despite initial antitrust concerns. According to sources familiar with the matter, the DOJ’s review has shifted focus to how the merger might impact consumers with no credit history, rather than concerns about the subprime lending market.

Earlier in March, reports indicated that the DOJ was considering blocking the deal over concerns that it would reduce competition, particularly in the subprime credit sector. However, sources now say the department has concluded it does not have a strong enough case to challenge the merger on those grounds in court.

While some officials within the DOJ remain divided on whether to pursue a case related to no-credit-history borrowers, the latest developments suggest regulators may ultimately allow the deal to proceed without legal opposition.

Capital One announced its acquisition of Discover in February 2024, touting the move as a transformational deal that would create a global payments powerhouse. The combined company would bring together two of the biggest credit card issuers in the U.S., with a merchant network spanning 70 million acceptance points across more than 200 countries and territories.

Consumer advocates have voiced concerns that the merger could lead to higher fees, reduced competition, and fewer lending options for vulnerable consumers, particularly those with little to no credit history. However, if the DOJ allows the deal to close, it would signal a more relaxed regulatory stance on major financial sector consolidations under the Biden administration.

If the DOJ does not file an antitrust lawsuit, Capital One and Discover could finalize the merger in the coming months, creating one of the largest financial institutions in the U.S. The decision could also set a precedent for other banking and fintech mergers, as regulators weigh the balance between industry consolidation and consumer protection.

For now, Wall Street and consumer watchdogs alike will be watching closely for an official DOJ decision in the coming weeks.

Richard Wells
UCW Newswire