Capital One-Discover Faces Daunting Regulatory Gauntlet, New Transaction Analysis Finds

March 21, 2024 Press Release

Washington, D.C. — The American Economic Liberties Project today released a new brief “Capital One-Discover: A Competition Policy and Regulatory Deep Dive,” which provides new analysis of the market dynamics at play in the transaction and examines how the proposed acquisition may fare under review from antitrust enforcement and bank regulatory agencies.

“Our analysis shows that this deal will harm competition, not help it, and that it poses a plain risk to financial stability and the public interest,” said Shahid Naeem, Senior Policy Analyst, Finance, at the American Economic Liberties Project. “It’s hard to imagine Capital One’s proposed acquisition of Discover surviving regulatory scrutiny in its current state. The transaction clearly runs afoul of both antitrust guidance from the Justice Department, which has signaled a firm return to its statutory role as an antitrust enforcer in banking, and policy statements from bank regulators, who are operating under heightened scrutiny after significant supervisory and regulatory failures.”

“The evidence suggests that this deal violates both antitrust law and our federal bank merger statutes,” added Naeem. “Now it’s up to regulators and enforcers to apply the law.”

As the brief lays out, the deal will likely draw scrutiny across several of the 2023 merger guidelines published by the FTC and DOJ in December 2023, which were updated and designed to help enforcers and courts identify and prevent anticompetitive mergers.

  • The transaction takes place across concentrated markets (banking, credit cards, and payment networks) which may be trending towards consolidation (Guidelines 1 and 7);
  • May threaten to eliminate substantial competition between firms (Guideline 2);
  • Involves a multi-sided platform whose control may entrench the acquiring firm’s market power in an adjacent market (Guideline 9); and
  • As admitted by Capital One CEO Richard Fairbank, aims to acquire and exploit a regulatory loophole, identified by antitrust enforcers in the Merger Guidelines as a possible example of mergers that lessen competition.

Beyond the deal’s wide-ranging effects on competition, the brief also finds that the transaction will likely draw scrutiny across all five components of the Federal Reserve and OCC’s statutory review of bank mergers, from the deal’s impact on financial stability and the public interest to the viability of the resulting institution moving forward, the firms’ regulatory and compliance records, and their ability to adhere to anti-money laundering laws.

The brief explains how the deal will enable and incentivize Capital One to raise consumers’ credit card interest rates and businesses’ transaction costs. A significant amount of the transaction’s projected efficiencies depend on a publicly-admitted regulatory arbitrage scheme that will further inflame the bloated payments system.

Read the full brief, “Capital One-Discover: A Competition Policy and Regulatory Deep Dive.”

Learn more about Economic Liberties here.


The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.