The U.S. Department of Justice (DOJ) has approved Capital One‘s $35 billion acquisition of Discover Financial Services, removing a key regulatory hurdle for what would create the nation’s largest credit card issuer by loan volume.
According to a confidential memo obtained by regulators, antitrust officials concluded there was insufficient evidence to block the merger under current competition laws. The decision represents a reversal from earlier Biden-era concerns that the deal could harm first-time credit card users and allow Capital One to circumvent debit card interchange fees.
The approval now shifts focus to remaining regulatory sign-offs required from the Federal Reserve and Office of the Comptroller of the Currency. A Capital One spokesperson stated: “Our transaction complies with all Bank Merger Act requirements, and we remain confident in receiving full approvals.”
Key Implications:
- Creates combined entity with over $250 billion in credit card loans
- Marks first major test of bank merger policy under new DOJ leadership
- Could reshape competitive landscape for card issuers and payment networks
The merger, already approved by shareholders of both companies in February 2025, would give Capital One control of Discover’s payment network – a rare asset among card issuers. Analysts suggest this could enable the combined company to better compete with Visa and Mastercard while potentially lowering costs.
Consumer advocates have expressed concerns about reduced competition, particularly in the subprime credit segment where both companies are major players. However, DOJ officials under newly appointed antitrust chief Gail Slater ultimately determined existing laws didn’t provide grounds to challenge the transaction.
The decision sets an important precedent for how federal regulators will evaluate major financial mergers amid ongoing debates about banking concentration and consumer protection.