Report: Justice Department Will Not Block Capital One Acquisition of Discover

The Justice Department reportedly told financial regulators that it didn’t have sufficient evidence to block the proposed merger between Capital One and Discover.

This decision would allow the two banking regulators that must approve the deal — the Federal Reserve and the Office of the Comptroller of the Currency — to approve the transaction, Bloomberg reported Thursday (April 3).

The Justice Department told the regulators of its decision in a confidential memo, the report said, citing unnamed sources.

The Justice Department did not immediately reply to PYMNTS’ request for comment.

Staff at the Justice Department were divided about whether the merger should be challenged, and the new antitrust division chief, Gail Slater, made the decision that there was not enough evidence to do so, according to the report.

Earlier, under the Biden administration, antitrust officials at the Justice Department had said they had some concerns that the deal could harm competition, per the report.

Under the Biden administration, the Justice Department looked at not only the competitive factors of the deal, which is what it normally focuses on in bank mergers, but also how the deal might affect different customer segments, fees, interest rates, bank locations, product variety, network effects, interoperability and customer service, the report said.

Capital One announced its planned acquisition of Discover in February 2024, saying the deal would create a global payments platform with 70 million merchant acceptance points in more than 200 countries and territories.

“Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies,” Richard Fairbank, founder, chairman and CEO of Capital One, said at the time in a press release.

The deal took a step toward completion in December when it received approval from the Office of the Delaware State Bank Commissioner.

It took another step forward in February, when the two companies said that more than 99% of their shareholders had voted to approve the merger. When announcing the votes, Capital One said it expected the transaction to close early this year, subject to approval by the Federal Reserve and the Office of the Comptroller of the Currency.