The US Department of Justice Cleared The Capital One/Discover Merger

The US Department of Justice recently cleared a merger between Capital One Finance Group and Discover Financial Service, valued at around $35 billion.

According to a memo to regulators, the Department of Justice did not find sufficient evidence to block the deal and prevent it from happening. The memo was confidential, but the information that leaked revealed that it was directed at the Federal Reserve and the Office of the Comptroller of the Currency.

The next step will include both of them signing off on the deal in order for it to move forward, and for Capital one and Discover to make their move.

A Controversial Merger Under Biden Was Approved Under Trump

Interestingly, this is the newer version of the memo, which was drafted under the Trump administration. A previous version drafted under the Biden administration in January of this year suggested that the merger could bring great harm to competition, especially when it comes to first-time credit card holders.

It also said that Capital One would be able to avoid interchange fees for its debit cards if the deal was allowed to go through. Now, however, the new antitrust division led by chief Gail Slater said that there is not enough evidence to challenge it, which means that the deal will likely be allowed to move forward.

Commenting on the new development, Capital One spokesperson said that the deal with Discover Financial is in full compliance with the Bank Merger Act and all the legal requirements that the Act imposes. They added that the companies feel like they are well-positioned to gain approval.

The deal was also approved by the two companies’ stockholders earlier this year, in February. However, it is still considered a controversial move by many. The fact that the DOJ did not find enough evidence to block it was also taken as an example of how the Department will manage similar bank deals under Trump, and how competitive factors might influence mergers in the future.