Capital One-Discover Merger Questioned by New York

Capital One’s proposed takeover of Discover Financial faces a new investigation into whether the merger violates antitrust law, this time by a New York Attorney General, Reuters reports.

In February, Capital One first announced it would attempt to acquire Discover for $35.5 billion to surpass JP Morgan as the largest credit card company by loans.

Capital One and Discover have more than $9.5 billion and $6.5 billion of credit card loans, respectively, positioning it as significantly impactful to New York.

However, New York Attorney General Letitia James warned that the impact of a merger would be "particularly felt by the often vulnerable New Yorkers with subprime credit scores."

James asked a state judge in Manhattan in court filings on Wednesday to subpoena Capital One for documents needed for her probe into whether the merger does violate antitrust laws because the Virginia-based bank had allegedly failed to cooperate with her probe.

In a statement, Capital One reported that it would respond to James through appropriate legal channels and was "well positioned" to win merger approval from federal banking regulators.

The bank said: "We have made a strong case on the pro-competitive and pro-consumer benefits of this transaction.”

This is the latest investigation into whether the proposed takeover violates antitrust laws as two Capital One customers from Vermont and New Jersey filed a lawsuit against the bank, claiming that the merger would reduce competition and increase prices.

The lawsuit argued the merger will lead to substantial lessening of competition in two important US antitrust markets, the general credit card market and the credit card payment processing market.