New York AG Investigating Proposed Capital One-Discover Deal
New York Attorney General Letitia James is reportedly investigating Capital One’s proposed acquisition of Discover Financial Services.
James asked a court for permission to issue subpoenas to Capital One, saying the bank had declined to voluntarily waive federal confidentiality protections, Bloomberg reported Wednesday (Oct. 23).
The effort is part of New York’s antitrust probe focused on the proposed deal, according to the report.
Capital One said in the report that it will respond to the state attorney general’s action through legal channels and that it is confident the merger will win regulatory approval.
Discover did not comment in the Bloomberg report and, when reached by PYMNTS, declined to comment on that report.
While the U.S. Justice Department is already reviewing the proposed deal, James said in a court filing that the deal would have “significant impact” on consumers in New York because the two companies have combined credit card loans of more than $16 billion in the state and would have a dominant 30% market share among subprime consumers.
Capital One announced its plans to acquire Discover in February, saying the $35.3 billion deal would create a global payments platform with 70 million merchant acceptance points in more than 200 countries and territories.
On Oct. 17, Discover Financial Services Interim CEO Michael Shepherd said during an earnings call that “Capital One continues to lead merger-related activities … with applications currently under regulatory review. Integration planning is advancing well.”
During Capital One’s July 23 earnings call, Richard D. Fairbank, founder, chairman and CEO of Capital One, said: “We’re ‘all in’ and working hard to complete the Discover acquisition, which will create a consumer banking and global payments platform with the potential to enhance competition, deliver compelling financial results and create significant value for merchants, small businesses and consumers.”
The deal’s opponents include Congresswoman Maxine Waters, D-Calif., who reiterated her opposition to the proposed merger on July 19 during a virtual meeting convened by the Federal Reserve and the Office of the Comptroller of the Currency.
Waters said the proposed merger must be rejected because it fails three tests that the law requires regulators to consider when it comes to mergers: the merger’s impact on competition, financial stability, and the convenience and needs of communities.
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