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The Biden Administration Takes A Swipe At Credit Card Competition

The Biden administration regulators see a monopoly boogeyman behind the curtain of nearly every business merger and acquisition – from airlines, to cell phones to chicken producers.

Now they’re trying to stop Capital One from acquiring the credit card company Discover.

That’s a bizarre cease-and-desist order from the Biden antitrust cops, because this merger would increase rather than inhibit competition in an industry that processes two-thirds of retail store and online transactions worth $5 trillion each year. Americans love swiping and tapping for their shopping.

To suggest that a merger of two companies that control less than 10 percent of the market is anti-competitive is a proposition that borders on the absurd.

For years the FTC and retailers have argued falsely that there isn’t competition in the credit-card market. There are dozens of credit cards issued by banks and retailers – and Americans have freedom to choose the best deal.

Visa, Mastercard and American Express have grabbed more than 90 percent of the market – not because of a lack of competition, but mainly because consumers like the convenience that almost all stores accept these cards, and million of shoppers like the reward points for free flights, vacation deals and cash-back options.

If Discover and Capital One combine forces, we could see the emergence of a fourth major player on the scene. Someone needs to tell the Biden regulators: If three major rivals compete, that’s good. If four do, that’s even better for consumers.

The merger is likely to mean fiercer competition – which means lower fees and interest charges.

This isn’t just conjecture. Discover already charges lower credit card processing fees than Visa, Mastercard, and American Express. With financial support from Capital One, it can make the investments needed to expand its market share, which would mean merchants would have opportunities to negotiate down interchange fees with card providers. Similarly, the rivalry will impel card issuers to offer consumers new and better benefits. Why would anyone oppose that?

Alas, it’s not just the Biden hyper-regulators that are trying to block this marriage. Senators Josh Hawley (a conservative Republican) and Elizabeth Warren (a liberal Democrat who hates “big” busines) are loud skeptics as well.

Hawley thundered that the merger represents “destructive corporate consolidation at its starkest” and would give the combined company “unprecedented powers to extort American consumers.” How can a company with 10-percent market share extort anyone?

Jamie Dimon, CEO of JPMorgan Chase, which is a direct rival of Capital One and Discover, espoused a more winning strategy: “companies should be allowed to innovate and grow and merge…if that’s how they think they can best compete with JP Morgan.”  His advice: “let the market decide.”

Amen. Government never reduces prices. The free enterprise system does.

Stephen Moore is a senior fellow at the Heritage Foundation and a co-founder of the Committee to Unleash Prosperity.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.


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