Capital One slams 'speculative' consumer lawsuit over $35 bln Discover deal
By Mike Scarcella
Aug 27 (Reuters) -Capital One and Discover Financial Services are defending their proposed $35 billion merger in a U.S. court, asking a Virginia judge to dismiss a consumer lawsuit that claimed the deal will reduce competition and drive up prices.
Capital One COF.N and Discover DFS.N in a court filing on Monday said the consumers’ allegations were “too contingent on unknown future events” to be allowed to move ahead while U.S. antitrust and regulatory bodies were still weighing the merger.
“Their allegations of harm are entirely speculative, incoherent, uncertain, and not imminent,” the companies told the court.
U.S. District Judge Anthony Trenga in Alexandria federal court on Tuesday set a hearing for Oct. 16.
Capital One, Discover and attorneys for the plaintiffs did not immediately respond to requests for comment. The Justice Department also did not immediately respond to a request for comment.
Two Capital One customers in Vermont and New Jersey filed the proposed class action in July, alleging the deal will violate U.S. antitrust law. The merger would create the biggest U.S. credit card issuer by balance and sixth-largest U.S. bank by assets.
U.S. antitrust law allows private civil lawsuits challenging proposed mergers.
Discover and American Express issue credit cards and run their own payment processing systems. Visa and Mastercard do not issue cards, but instead operate the country’s largest card payment networks.
Discover and American Express put pressure on rivals to pay out rewards to customers to stay competitive, the consumers’ lawsuit said.
In the filing, credit card issuer Capital One said its planned acquisition of payment network operator Discover, announced in February, would “inject greater competition” into the market.
The proposed Capital One purchase of Discover has drawn calls by some members of Congress for U.S. regulators to block the deal.
The case is Baker v. Capital One Financial, U.S. District Court for the Eastern District of Virginia, No. 1:24-cv-01265.
For plaintiffs: Brian Dunne and Yavar Bathaee of Bathaee Dunne
For Capital One: Ryan Shores of Cleary Gottlieb Steen & Hamilton; John Moran of McGuireWoods; and Ryan McLeod of Wachtell, Lipton, Rosen & Katz
For Discover: Daniel Richardson and Amanda Davidoff of Sullivan & Cromwell
Read more:
Capital One customers sue to block $35 billion Discover merger
Capital One, community groups square off in public meeting on Discover deal
Capital One's $35 billion Discover deal hinges on playing consumer champion
Capital One to buy Discover Financial in $35.3 billion all-stock deal
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