The department, during the Biden administration, initially said it had concerns about the merger of two of the largest credit card companies in the U.S.
Capital One cleared a significant obstacle to its proposed acquisition of Discover Financial Services after the Justice Department told regulators that it doesn’t see sufficient competition concerns to block the deal, according to two people with knowledge of the matter.
The deal, a $35 billion merger of some of the nation’s largest credit card companies announced in February 2024, was initially met by concerns that it could harm consumers. During the Biden administration, the Justice Department had told regulators that it was concerned, in part, about the impact the deal would have on potential credit card users who have no credit.
But the department’s investigation into the deal was still ongoing when President Trump took office. This week, the department sent a letter to the Federal Reserve and the Office of the Comptroller of the Currency saying it had concluded its investigation and did not believe there were concerns that warranted blocking the deal, said the two people, who requested anonymity because the information is confidential.
A spokeswoman for the Justice Department declined to comment. A spokesman for Capital One also declined to comment on the review process, but said in a statement that the deal “complies with the Bank Merger Act’s legal requirements and we remain well-positioned to gain approval.”
The department does not have direct authority to approve banking deals, but it can sue to block them. The Federal Reserve and comptroller could still block the deal, but the new legal analysis is significant because analysts had expected the Justice Department to be the most likely of the three agencies to object. Federal banking agencies have not formally denied a bank merger application since 2003, according to Jeremy Kress, a professor of law at the University of Michigan business school.
In the last months of the Biden administration the Justice Department had moved to tighten oversight of banking deals. The department put in place more stringent guidelines over how it evaluates banking deals, updating that framework for the first time since 2008.