Challenges for Acquisition: New York Attorney General Investigates Merger of Capital One and Discover

The planned acquisition of Discover Financial Services by Capital One, valued at $35.3 billion, has come under the scrutiny of New York State antitrust regulators. Attorney General Letitia James is conducting an investigation to determine whether the merger violates the state's competition law. James is currently seeking a court order to compel Capital One to release relevant documents, as the bank has allegedly not been sufficiently cooperative. A merger of the two financial giants could have significant impacts on the credit card market in New York. Together, Capital One and Discover hold credit card loans worth over $16 billion in the state. Those particularly affected would be New Yorkers with subprime credit scores, representing particularly vulnerable consumer groups. Some investors are already concerned that the deal could reduce competition and increase costs for consumers. The merger is set to create the largest credit card issuer in the U.S., with a credit volume exceeding $250 billion and a card network encompassing more than 305 million cardholders. This merger even surpasses industry leader JPMorgan Chase. The expansion of Capital One's payments business would come within reach with the proposed merger. However, until shareholders, the Federal Reserve, and the Office of the Comptroller of the Currency grant approval, the future of this mega-deal remains uncertain. Both companies involved aim to complete their merger by early 2025. In the meantime, Discover has agreed to full disclosure to the judicial authorities, while Capital One, citing legal concerns, is resisting. Additionally, customers of the two financial companies have filed lawsuits, expressing concerns that their interests could be threatened by the merger.