Majority Leader Schumer Demands Information From Capital One And Discover On Their Proposed Merger To See If It Violates Antitrust Laws Or Hurts Consumers

Washington, D.C. - Senate Majority Leader Chuck Schumer (D-NY) sent letters to Capital One and Discover regarding their proposed $35 billion merger to better understand the potential anticompetitive effects of such a deal. 

This weekend, Senate Majority Leader Chuck Schumer sent letters to Richard Fairbank, the CEO of Capital One Financial Corporation, and Michael Rhodes, the CEO of Discover Financial Services, demanding information on Capital One’s proposed acquisition of Discover and its potential competitive effects and impact on the financial ecosystem. If this deal were to go through, it would make the newly combined company the largest credit card issuer in the United States. Excessive market consolidation has historically harmed consumers, and Leader Schumer wants to investigate whether applicable antitrust and banking laws are functioning as intended. 

"Another day, another merger that would further consolidate our markets. Capital One’s proposed acquisition of Discover is just the latest example of a broader trend of excess concentration throughout our economy - to the detriment of the American consumer," said Leader Schumer. "Congress has a duty and an obligation to investigate mergers like this to see what their effects on the relevant markets will be and how they could raise prices or limit options for everyday costumers."

Credit cards are unique products, and because of varied consumer profiles across the financial ecosystem, the competitive effects of this transaction will likely vary for different subgroups. There are meaningful, narrower costumer types, including the elderly, young people, and those with bad credit, who may be limited in their ability to switch to new banks or whose preferences may impact which lenders are reasonable substitutes. This means there is less actual competition than a national market including all customers would suggest. Antitrust law generally prohibits transactions that might harm competition or create a combined market share above 30 percent in any line of commerce, not just national markets, even when companies allege that a merger would unlock procompetitive synergies, as the parties do in this case. 

To better understand the implications of this proposed merger, Leader Schumer has asked Capital One and Discover for more information on market shares in relevant submarkets, historical trends on APRs and annual fees, planned layoffs, and quantified details about the synergies the deal is expected to produce.

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