Senator Elizabeth Warren has urged regulators to block Capital One’s $35bn takeover of Discover Financial, arguing that combining two of the US’s largest credit card companies would harm consumers and challenge financial stability.
The blockbuster deal would inevitably lead to higher costs and fees for cardholders, according to the leftwing senator.
Richard Fairbank, chairman and chief executive of Capital One, has claimed the planned acquisition amounts to “a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies”.
Analysts said the move could shake up the payments industry, which is largely dominated by the giants Visa and Mastercard. But Warren, the progressive Democrat from Massachusetts, said the move would dent, rather than strengthen, competition.
The payments space – particularly Visa and Mastercard – has faced heightened scrutiny in recent years. The Biden administration has adopted an aggressive stance on antitrust issues.
Discover Financial investors, who must vote on the deal, have been offered shares in Capital One worth almost $140: a significant premium to the $110.49 that shares in Discover closed at on Friday.
Announcing the deal on Monday, Capital One said it expects the transaction to be done “in late 2024 or early 2025”, subject to “customary closing conditions, including regulatory approvals and approval by the shareholders of each company”.
Both companies are likely to face questions from lawmakers, including Warren.
The acquisition “threatens our financial stability, reduces competition, and would increase fees and credit costs for American families”, the senator said in a statement. “This Wall Street deal is dangerous and will harm working people.
“Regulators must block it immediately.”
Capital One and Discover Financial did not immediately response to requests for comment.
Associated Press contributed reporting