Lessons for Antitrust from the Capital One-Discover Merger: Is There a Subprime Market in Credit Cards?

Abstract

In April 2025, the Office of the Comptroller of the Currency cleared the proposed $35 billion merger of Capital One and Discover Bank, making the combined company the third-largest credit card issuers by volume. Because of the highly decentralized nature of the US. credit card industry, the merger typically would draw minimal regulatory scrutiny. Because of the significant market share of the two entities in the so-called subprime credit card market, however, the merger presented a novel question at the intersection of competition policy and consumer financial services- whether the subprime market should be analyzed as a separate market for antitrust purposes. According to one estimate the combined entity will have approximately 30% of the subprime market at the time the merger is consummated. The OCC did not specifically address whether there was a subprime market that should be treated as a separate market for purposes of analyzing the effect on consumers and competition. We agree with that analysis. Although the term subprime is used colloquially, defining a subprime market lacks a determinate and stable definition for purposes of rigorous antitrust analysis. Moreover, consumers who participate in the subprime market are subject to constant change and turnover, moving frequently between the subprime and prime markets. Finally, given the permeability of any demarcation between prime and subprime consumers, other large credit card issuers already have a presence in the subprime market and could easily expand their existing operations if Capital One-Discover attempted to increase prices for consumers.

Headnote

Abstract

In April 2025, the Office of the Comptroller of the Currency cleared the proposed $35 billion merger of Capital One and Discover Bank, making the combined company the third-largest credit card issuers by volume. Because of the highly decentralized nature of the US. credit card industry, the merger typically would draw minimal regulatory scrutiny. Because of the significant market share of the two entities in the so-called subprime credit card market, however, the merger presented a novel question at the intersection of competition policy and consumer financial services- whether the subprime market should be analyzed as a separate market for antitrust purposes. According to one estimate the combined entity will have approximately 30% of the subprime market at the time the merger is consummated.

The OCC did not specifically address whether there was a subprime market that should be treated as a separate market for purposes of analyzing the effect on consumers and competition. We agree with that analysis. Although the term subprime is used colloquially, defining a subprime market lacks a determinate and stable definition for purposes of rigorous antitrust analysis. Moreover, consumers who participate in the subprime market are subject to constant change and turnover, moving frequently between the subprime and prime markets. Finally, given the permeability of any demarcation between prime and subprime consumers, other large credit card issuers already have a presence in the subprime market and could easily expand their existing operations if Capital One-Discover attempted to increase prices for consumers.

I. Introduction

In April 2025, the Federal Reserve Board' and the Office of the Comptroller of the Currency? approved the $35 billion acquisition of Discover Financial Services by Capital One Financial Corporation. The merger was cleared just days after the Department of Justice (DOJ) reportedly informed financial regulators that it does not intend to block the $35 billion transaction. The Delaware State Bank Commissioner granted approval in December 2024," and shareholders of both Capital One and Discover overwhelmingly approved the merger in February 2025.5

Under traditional antitrust analysis, Capital One-Discover should have barely raised an eyebrow. Following the consummation of the merger, the combined company became the third-largest credit card issuer by purchaser volume, after JPMorgan Chase and American Express. Given that there are thousands of credit card issuing banks in the United States and the largest issuers only have a modest percentage of all volume any potential countervailing adverse effect on competition would likely be minor if noticeable at all. As with its banking operations, its scale and innovative approach toward credit cards could drive improvements-especially for those with lower credit scores-both directly for its customers and indirectly for customers of other banks, who would be driven to provide competitive offerings.

On the other hand, the merger raised several novel issues of antitrust law and competition policy. In particular, a centerpiece of the merger was Capital Ones desire to acquire Discovers existing, but stagnant, payment card processing network. Given ongoing concerns by Congress and antitrust agencies about a perceived lack of competition among payment card processing networks, the combination of Discovers existing network with Capital One's innovative culture promises significant consumer benefits.

Another novel issue implicated by the merger was the question of the impacts on consumers and competition in the so-called "subprime" credit card market. Both Discover and Capital One traditionally have held an active and significant presence in that market. According to the New York State Attorney General's office, the combined company would control roughly 30% of the subprime credit-card market 3

The Federal Reserve Board' analysis of the merger provided minimal discussion of the effects of the merger on the subprime market. According to the Federal Reserve Board, some commenters on the merger expressed concern that it would lead to higher interest rates or fees or decrease access to credit for subprime and those with little or no credit history (labeled "newto-credit" customers) ? It was also argued that the subsequent Herfindahl-Hirschman Index ("HHI") measure for outstanding credit-card balances for subprime customers would trigger a presumption that the proposed transaction would violate antitrust laws, although the Board concluded that this measure would remain well below the traditional 1800 HHI measure that would trigger concern. As a result, the Board dismissed these concerns as unfounded.

Similar comments were filed with the OCC, which were summarized in an Appendix to the OCCs letter approving the merger. Among others, commenters argued that following the merger, the combined entity "would hold a substantial portion of outstanding loans to borrowers with subprime scores, an amount materially larger than that of competitors." It was also argued the "subprime credit card market has structural features that would prevent the [new bank'] customers from moving to competitors" and that it would remove Discover Bank as a "key competitor" in the market."" This combination of factors, it was claimed, would provide the new bank with sufficient market power to "effectively raise prices for all their customers, but especially LMI and subprime borrowers and Discover Bank's current Although the OCC provided a summary of these comments in its Appendix, it did not provide a separate analysis of their merits in its letter approving the transaction.

Although we agree with the conclusion of the Board and OCCss analysis, it ignores a deeper question with implications for future mergers-should the "subprime" credit card market even be considered a distinct market for purposes of antitrust merger analysis? The term "subprime" is commonly used in the credit card industry to categorize borrowers who present a higher risk of default due to their credit history." However, a significant challenge in analyzing this segment of the market-especially to evaluate antitrust concerns related to mergers-lies in the absence of a uniform definition for "subprime." This lack of standardization is evident when examining the diverse criteria employed by credit card issuers and government agencies to classify borrowers. Bank of America's annual report notes, "a standard industry definition for subprime loans... does not exist." Experian reports, "[S]ubprime is a moving target. Each lender defines subprime and prime depending on their lending strategies and business goals"15

Credit card companies predominantly utilize credit scoring models developed by FICO and VantageScore, both of which present different perspectives on credit-worthiness.'· VantageScore explicitly defines the "subprime" range as encompassing credit scores between 300 and 600." In contrast, FICO does not use the term "subprime" directly but identifies scores below 670 as "Fair" and 580 as "Poor," with both classifications generally considered to be subprime." The Board classified as "subprime" those consumers with FICO scores of less than 660, then separately analyzed those with sub-620 FICO scores." In addition, Experian identifies scores of 660 and lower as "nonprime;" 600 and lower as "subprime," and below 500 as "deep subprime?" The fundamental differences among service providers illustrate an inherent ambiguity in defining subprime at the foundational level of credit assessment.

Government agencies, such as the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve System, also play a crucial role in understanding the credit card market, but their definitions of "subprime" further contribute to the lack of a unified standard. The CFPB, for example, describes FICO scores of 300-579 as "deep subprime," 580-619 as "subprime," and 620-659 as "near prime" in a 2025 report." Research published by the Federal Reserve defines "subprime" as those borrowers with Equifax Risk Scores of less than 620 and "near prime" as those with scores of 620-719.22 The inconsistency across government agencies underscores the absence of a universally accepted definition.

"Subprime" credit card markets also lack a coherent definition because of the unusually dynamic nature of the consumers that comprise them. Consumer credit scores can change dramatically and within a very short period of time. As a result, there is a great deal of churn in the individual consumers in the subprime credit card market over time. Thus, while certain companies may maintain a larger market share in the subprime market over time, it is only by virtue of their comparative ability to attract new customers with their offerings, as existing customers either graduate out of the subprime market or drop out of the market from default.

This article examines the market for credit card borrowing and concludes that lending to consumers with "subprime" credit does not constitute any distinct relevant market for conducting an antitrust review of the merger. Section II describes the standards for delineating a relevant market under U.S. law and policy. Section HI demonstrates that demand-side substitution fatally undermines claims that "subprime" constitutes a distinct antitrust market. Sections III and IV provide evidence that demand-side and supply-side substitution further negates the claim that "subprime" constitutes a relevant antitrust market. Section V identifies ways in which the proposed merger will likely be procompetitive for consumers with "subprime" credit.

II. Legal Standards for Market Definition

Much of the concern has been focused on potential harms to specific groups of credit card customers, especially cially what has been described as the "near-prime" or "subprime" segments of borrowers with FICO scores below 660.7 To the extent that Capital One holds a significant presence in the subprime market it likely reflects the company's innovative ability in serving and underwriting subprime consumers, not any barriers to entry or other artificial barriers. As former Federal Deposit Insurance Corp. (FDIC) Chair Sheila Bair concluded:

I suspect Capital One's subprime market share is relatively substantial because other banks simply have less (or no) interest in serving subprime customers. Subprime lending involves higher capital requirements, greater regulatory scrutiny and more resources to underwrite and manage those accounts. Any concentrations in the subprime market are the result of banks" conscious investment decisions, not barriers to entry.24

But the merger raised an even more fundamental and novel question of antitrust lıw- whether the subprime credit market is in fact a distinct "market" for purposes of antitrust analysis. One critic of the merger argues that these consumers' higher risk, as well as Capital One and Discovers direct-mail marketing to these consumers, suggest they constitute a distinct "submarket.25

In contrast, the Bank Policy Institute argued:

No evidence has been put forth by critics of the proposed merger to define the boundaries of the subprime segment and establish that consumers in this segment are sufficiently isolated for it to be considered a distinct submarket for antitrust purposes.26

Broadly speaking, U.S. antitrust law provides two approaches toward evaluating which products and services comprise a relevant market. The first are known as the "principal indicia," first described in Brown Shoe v. United States. The second, more recent, approach is the "hypothetical monopolist test."

A. Brown Shoe 'Practical Indicia'

Brown Shoe Co. v. United States established the "practical indicia" test for market boundaries, requiring evidence of distinct product characteristics, specialized vendors, or unique consumer groups." This approach has long been controversial. For example, Geoffrey Manne and Marcellus Williamson criticize Brown Shoe's reliance on "industry or public recognition of the market as a separate economic entity. "· They argue that this approach is fundamentally flawed because business people and the public often use the term "market" for various reasons unrelated to economic substitutability, which is the core of a proper antitrust market definition. They emphasize that antitrust market definition should be based on economic analysis of substitutability, not on how businesses casually use terms like "market" or "industry" The authors warn that relying on such non-economic evidence can lead to overly narrow market definitions that exaggerate market power and result in erroneous antitrust decisions. Manne & Williamsons criticism is especially apt with respect to attempting to delineate markets, "submarkets," or "segments" based on credit score. For example, it was once rumored that the DOJ may have been concerned that the Capital One/ Discover merger would be anticompetitive in "subprime," "near prime," "student," or "no-credit-history" submarkets.29

While companies, analysts, and commentators may casually refer to "prime" or "subprime" consumers, such shorthand does not necessarily define relevant economic markets for evaluating the competitive effects of a proposed merger. Indeed, among the business press, there is a stunning paucity of articles that describe a "subprime market" for credit cards as opposed to a general category of subprime consumers that is useful for marketing purposes.

Even if one accepts, for the sake of argument, that Brown Shoe is an appropriate framework for evaluating where there is distinct subprime-or near prime, student, or no-credit-history-credit card market, none of these categories satisfy Brown Shoes principle indicia. As we discuss below, they do not have distinct product characteristics, do not constitute unique consumer groups, and are not served by specialized vendors.

III. Hypothetical Monopolist Test in a Two-Sided Market

Credit card markets are classic examples of two-sided platforms that facilitate transactions between merchants and cardholders. In Ohio v. American Express, the Supreme Court established that credit card networks are "two-sided transaction platforms" where merchants and cardholders simultaneously choose to use the network." The Court held that these platforms cannot be analyzed by looking at just one side of the market in isolation, as the value of the platform to users on one side depends on the number of users on the other side.

The Hypothetical Monopolist Test (HMT) evaluates whether a group of products is sufficiently broad to constitute a relevant antitrust market by asking whether eliminating competition among these products by combining them under the control of a hypothetical monopolist would likely lead to a worsening of terms for customers. The test is typically implemented through a small but significant and non-transitory increase in price (SSNIP) analysis, which asks whether a hypothetical monopolist could profitably impose a 5-10% price increase on the candidate market.

In two-sided markets like credit cards, the traditional HMT must be modified to account for the interdependence between the two sides of the platform. As the Second Circuit noted in the Amex case, the proper HMT analysis must "consider the feedback effects inherent on the platform" by accounting for how changes in demand on one side affect demand on the other side.31

For subprime credit cards, this means examining:

1. Both sides of the platform simultaneously: The analysis must consider both merchants who accept the cards and the cardholders who use them. On the merchant side, this would include merchant discount rates and interchange fees. On the cardholder side, this would include interest rates, annual fees, late fees, and rewards programs.

2. Net price rather than one-sided price: Following Ohio v. American Express, the analysis should focus on the "net price" of transactions across the platform, not just prices on one side, which means the benefits and costs to both the merchant and consumer sides of the market must be aggregated to determine the overall effect on consumers and competition.

3. Cross-platform substitution and competition from adjacent products and markets: The analysis must assess whether prime credit cards or other financial products-such as personal loans, buy-now-pay-later, or secured cards -constrain the pricing of subprime cards sufficiently to prevent a profitable SSNIP. It must also assess whether merchants could steer subprime customers to other payment methods without losing significant business.

We are not aware of any published research using the HMT to evaluate whether subprime credit cards are a relevant market. While published research discusses the application of the HMT to the broader credit card market, including its complexities as a two-sided market, there is no specific mention or analysis of the subprime segment within this market. The academic literature focuses on defining the relevant market for credit card services in general, often debating whether to consider the "total price" or specific fees like interchange fees.32 This is likely because conducting a robust HMT analysis requires detailed data on price elasticities and substitution patterns. Obtaining granular data specifically for the subprime credit card market, separate from the broader credit card market, might be challenging. Moreover, the credit scores used to define "subprime" are arbitrary and the boundaries of the subprime market are fluid, with borrowers frequently moving between credit score categories over time. Thus, applying the HMT to reliably evaluate a distinct subprime market may be so complex as to be nearly impossible.

III. Demand-Side Substitution

Demand-side substitution-the ability of consumers to switch to alternative products in response to price increases or reduced quality-fatally undermines claims that "subprime" constitutes a distinct antitrust market.

Citing Brown Shoe, the latest version of the DOJ/ FTC Merger Guidelines notes, "The outer boundaries of a relevant product market are determined by the 'reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it?" Substitutability is the sine qua non of market definition: If two products are reasonably substitutable or-even better -actually substituted by consumers, then the two products are said to be in the same relevant market. Sweet onions and yellow onions are reasonable substitutes for each other, but fresh onions and frozen battered onion rings are not. For consumers with subprime credit scores, the question is what are the reasonable substitutes for a credit card.

In a 2024 earnings call, Richard Fairbank, Capital One Chairman & CEO, identified several substitute products that are "looking to take market share from traditional credit card players":

Let's also remember that consumers can choose to use another form of payment entirely, cash, debit or Buy Now Pay Later, which has exploded onto the marketplace. New fintechs are entering the payments in small dollar credit space every day, all looking to take market share from traditional credit card players like Capital One. We faced this competition for years and we'll continue to face it in the future. It's powerful evidence of a healthy and fiercely competitive marketplace.34

Evidence from the CFPB indicates that subprime borrowers routinely access credit card alternatives, such as buy-now-pay-later, a rapidly growing alternative to subprime credit cards:

* Roughly 21% of consumers with a credit record borrowed using BNPL from at least one of the six firms at least one time during 2022.35

* From 2021 to 2022, borrowers with deep subprime credit scores accounted for 45% of BNPL originations, while those with subprime credit scores were responsible for another 16% of originations.36

Secured credit cards are another alternative to standard subprime credit cards. Consumers without a credit history access secured credit cards, which they can use to establish credit, increase their credit scores, and "graduate" to unsecured cards. Research published by the Philadelphia Fed reports that about 57% of new secured card borrowers lack a credit score at origination." Of those with a credit score, about half are "deep subprime" and another 25% are "subprime."38

To the extent that a clear line between "prime" and "subprime" products existed early in the evolution of the market, that largely arbitrary distinction has eroded. Consider the availability of rewards cards, a traditional marker between prime and subprime credit cards. According to several consumer banking trade associations, by mid-2022, rewards cards made up 85% of total credit card accounts in the U.S." For new accounts (less than two years old), rewards cards comprised 78% of total accounts. Among subprime accounts, rewards cards made up 72% of total card volume, compared to only 42% of total volume in 2008. With rewards card available to- and adopted by -consumers with subprime credit, the presence or absence of rewards provides little information whether the card is a "prime" or "subprime" product.

One important consideration in evaluating this concern is that a consumer' credit status is rarely static over time. Due to changes in income and other circumstances, a subprime borrower today may be a prime borrower next year, and vice versa. Using data from 2014 and 2015, Fair Isaac found that a "notable percentage" of FICO scores migrated up or down more than 20 points in a six-month period, with 14% of accounts decreasing by more than 20 points, and 19% increasing by more than 20 points." A more recent analysis by the CFPB reported 43% of consumers with subprime credit scores moved up at least one tier during the COVID pandemic, whereas in the ten years prior to the pandemic, only 37% moved up at least one tier.41 In a letter to the Federal Reserve Bank of Richmond and the Office of the Comptroller of the Currency, Capital One reports, "Since our founding, we have enabled more than 42 million customers with subprime or no FICO scores when they opened a card with the bank to achieve prime or better FICO scores."42

Research published by the Federal Reserve Bank of Philadelphia examined the extent to which holders of secured credit cards "graduate" to unsecured cards." The analysis reports that most graduations occur between six and 12 month into the accounts life, with 33% of "unscored" borrowers (i.e., those with no credit history when the account was opened) graduating within a year, and about half graduate within 30 months.

Thus, even if a subprime or near-prime market segment can be defined, migration into and out of these segments makes it exceedingly difficult to establish a reliable market definition for antitrust analysis.

IV. Supply-Side Substitution

Supply-side substitution-the ability of firms to redeploy resources to produce substitute goods or enter new markets -further negates the claim that "subprime" constitutes a distinct antitrust market. This analysis demonstrates that credit card issuers and fintechs can rapidly adjust offerings to compete for subprime borrowers, constraining any potential anticompetitive behavior.

While the prevailing approach in U.S. antitrust analysis, as outlined in the Horizontal Merger Guidelines, prioritizes demand-side substitution in the initial market definition, supply-side considerations are not entirely excluded. Supply responses are taken into account when identifying the participants in the relevant market and when assessing the likelihood of new entry. Specifically, firms that are not currently producing the product in question but could rapidly enter the market without incurring significant sunk costs in response to a price increase are considered "rapid entrants" and are factored into the competitive analysis. These rapid entrants are defined as firms that "very likely would rapidly enter with direct competitive impact in the event of a small but significant change in competitive conditions."44 Jorge Padilla explains:

Indeed, even if consumers were unable to react immediately to an increase in price, producers might be able to do so rather quickly. How? First, some of them may be endowed with assets (physical and human) that can be easily adjusted to produce substitute goods. If these producers were able to respond to a price increase by switching their production facilities to produce the goods or services subject to such price increase, then consumers would be able to avoid abuse.45

Capital One entered and gained its market share in the "subprime" market over time through its data-driven strategy. This has enabled the company to identify lower-risk individuals in (otherwise) higher-risk groups, thereby serving otherwise underserved consumers, while limiting default risk.· It's been estimated that the combined company would account for approximately 30% of the subprime segment (Table 1). While this may be considered a sizable share, it is far short of a monopoly.

Moreover, the other three of the five largest issuers-JP Morgan Chase, Citigroup, and Bank of America -account for about one-third of subprime balances. These firms have the expertise and resources to respond to any post-merger increase in price or diminution of quality. The fact that major prime credit card issuers already operate in the subprime segment demonstrates that the necessary infrastructure, regulatory understanding, and risk management frameworks are not unique to specialized subprime lenders. These firms could easily expand their subprime offerings if market conditions, such as a price increase, made it more attractive.

In a 2024 earnings call, Richard Fairbank, Capital One Chairman & CEO, noted "[A]ny existing bank can choose where in the credit spectrum they play simply by changing their credit policy"47 In the same call, he claimed, BNPL "has exploded onto the marketplace"" Commenting on the pending deal between Capital One and Discover, Michael Imerman at the University of California, Irvine concluded, "As a result, the combined bank would be in a position to be more competitive against digital banks and fintech competitors that have made significant progress moving upmarket in the consumer banking space in the past few years.?"48

V. Procompetitive Effects for Subprime Consumers

Capital One and Discover specialize in providing services to customers with lower credit scores in different ways and the combination will enable them to leverage their combined expertise to serve those customers better. For example, it will be able to use Capital One's algorithms to identify customers of Discover who, in spite of having low credit scores, are lower risk, and offer those customers loans at preferential rates.

This highlights the reality of "subprime" credit: it is not a separate credit card "market" because, as discussed above, the individuals classified as "subprime" are dynamic, as many subprime consumers improve their credit and gain access to prime cards while those with higher credit scores hit bumps in the road and move in the opposite direction.

Most major card issuers have focused on catering to wealthier, high-spend, and low-risk consumers that require less effort to underwrite and serve and lower capital reserve requirements. Capital One gained its market share in "subprime" over time through its data-driven strategy and ability to better identify diamonds in the subprime rough than competitors. This has enabled the company to identify lower-risk individuals in (otherwise) higher-risk groups, thereby serving otherwise underserved consumers, while limiting default risk. It also provides opportunities for these consumers to migrate toward a lower-risk category by gradually increasing the size of their credit lines as they demonstrate creditworthiness.51

The combination of Capital One and Discover will almost certainly increase access to credit for people with low credit scores, thereby enabling them to get onto the first rung of the credit ladder and to build (or rebuild) their credit. It should thus be considered a good outcome for the new Administration, with its increased attention to the effects of mergers on working class Americans.

VI. Conclusion

In reviewing the proposed acquisition of Discover by Capital One Corporation, the Federal Reserve Board analyzed the Financial Services Financial potential concerns about the merger in the subprime credit card market and found them lacking in merit. We argue that perhaps the regulators should have gone still further -under standard antitrust analysis, it is doubtful whether the subprime credit card market should be analyzed as a separate market for antitrust purposes. The fluid nature of credit scores undermines attempts to define static market boundaries. Moreover, the extensive demand-side substitution opportunities -including secured cards, buy-now-pay-later services, and traditional banking products-provide meaningful competitive constraints on any potential market power in credit card lending to consumers with lower credit scores.

From a supply-side perspective, major credit card issuers like JPMorgan Chase, Citigroup, and Bank of America already serve subprime borrowers and could readily expand their offerings if the merged entity attempted to raise prices or reduce quality. Rather than harming competition, the Capital One-Discover merger promises to enhance financial access for consumers with lower credit scores by combining Capital One's sophisticated risk-assessment algorithms with Discover' infrastructure. This would enable the merged entity to better identify lower-risk individuals within traditionally higher-risk categories, potentially offering them more favorable terms than either company could provide independently.

1. Federal Reserve System, Capital One Financial Corporation, Order Approving the Acquisition of a Bank Holding Company, the

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George Mason University Foundation Professor of Law, International Center for Law & Economics, International Center for Law & Economics, International Center for Law & Economics.

Footnote

Notes

1. Federal Reserve System, Capital One Financial Corporation, Order Approving the Acquisition of a Bank Holding Company, the merger of Bank Holding Companies, and Acquisition of Nonbanking Subsidiaries (Apr. 18, 20205).

2. Letter of Stephen A. Lybarger, Deputy Comptroller, Office of the Comptroller of the Currency to Richard K. Kim, Wachtell, Lipton, Rosen & Katz, Application for Merger of Discover Bank, Greenwood, Delaware with and into Capital One, National Association, McLean, Virginia (Apr. 18, 2025).

3. Capital One's Discover Acquisition Gains Approval from Justice Department, GlobalData (Apr. 7, 2025), https://finance.yahoo. com/news/capital-one-discover-acquisition-gains-112243059.html.

4. Katie Tabeling, Delaware Bank Regulators Approve Capital One, Discover Deal, Del. Bus. Times (Dec. 19, 2024), https://delawarebusinesstimes. com/news/delaware-bank-regulators-capital-one.

5. Press Release, Capital One and Discover Stockholders Approve Capital One's Proposed Acquisition of Discover, Capital One Financial Corp. (Feb. 18, 2025), https:// investor.capitalone.com/news-releases/news-release-details/ capital-one-and-discover-stockholders-approve-capital-ones.

6. Tiziana Barghini, Capital One's Discover Acquisition Would Reshape US Credit Card Industry, Glob. Finance Mag. (Mar. 4, 2024), https://gfmag.com/banking/capital-one-acquires-discover.

7. See Julian Morris, EricFruits, Ben Sperry, and Todd J. Zywicki, The Capital One-Discover Merger: A Law and Economics Analysis, 43(9) Bankging and Financial Services Policy Report 1 (Sept. 2024).

8. Caitlin Mullen, Capital One-Discover Deal Draws NY Scrutiny, Payments Dive (Oct. 25, 2024), https://www.paymentsdive. com/news/ny-ag-letitia-james-capital-one-discover-deal-antitrustprobe/ 731004.

9. See Federal Reserve Board, supra note 1; see OCC, supra note 2 at 4-5.

10. See Federal Reserve Board, supra note 1, at 14 and 14, n. 42. According to the Federal Reserve Board, the post-merger HHI for the subprime credit-card market would remain "well below 1800" across all measures (existing accounts, new accounts, balances, and purchases).

11. These "structural features" allegedly include, "the smaller number of products available to subprime consumers versus prime consumers, balance transfer fees, credit score inquiries and closed accounts leading to consumer credit score reductions, and the time needed for consumers to navigate these factors." Id. at Appendix, p. 3.

12. Id. at Appendix, p. 3.

13. Tim Maxwell, The Pros and Cons of Subprime Mortgages, Experian (Jul. 11, 2022), https://www.experian.com/blogs/ ask-experian/the-pros-and-cons-of-subprime-mortgages.

14. Annual Report (Form 10-K), Bank of America Corp. (Mar. 25, 2025), available at https://investor.bankofamerica. com/regulatory-and-other-filings/all-sec-filings/content/ 0000070858-25-000139/0000070858-25-000139.pdf.

15. Louis DeNicola, What Does Subprime Mean?, Experian (July 9, 2022), https://www.experian.com/blogs/ask-experian/ what-is-subprime/.

16. Louis DeNicola, The Difference Between VantageScore Credit Scores and FICO Scores, Experian (Mar. 31, 2023), https://www.experian. com/blogs/ask-experian/the-difference-between-vantage-scoresand- fico-scores/.

17. VantageScore 4.0 User Guide, Vantage Score (Sep. 2022), available at https://web.archive.org/web/20250108190418/https:// www.vantagescore.com/wp-content/uploads/2022/09/VantageScore- 4.0-UserGuide_abr_Sep22.pdf.

18. Brianna McGurran, What Is a FICO Score, and Why Is It Important?, Experian (July 24, 2024), https://www.experian.com/ blogs/ask-experian/fico-score-what-it-is-and-why-its-important/.

19. See Federal Reserve Board, supra note 1, at 14 n.40, 14 n.42.

20. Elizabeth Gravier, The 5 Credit Score Ranges You Need to Know, CNBC (Dec. 27, 2024), https://www.cnbc.com/select/ borrower-risk-profiles-based-on-credit-score/.

21. Consumer Financial Protection Bureau, Consumer Use of Buy Now, Pay Later and Other Unsecured Debt (Jan. 2025), https://files. consumerfinance.gov/f/documents/cfpb_BNPL_Report_2025_01. pdf.

22. John Driscoll, Jessica Flagg, Bradley Katcher & Kamila Sommer, The Effects of Credit Score Migration on Subprime Auto Loan and Credit Card Delinquencies, FEDS Notes (Jan. 12 2024), https:// www.federalreserve.gov/econres/notes/feds-notes/the-effects-of-credit- score-migration-on-subprime-auto-loan-and-credit-card-delinquencies- 20240112.html.

23. CFPB provides the following definitions: superprime (800 or greater), prime plus (720 to 799), prime (660 to 719), nearprime (620 to 659), subprime (580 to 619), and deep subprime (579 or less). Consumer Financial Protection Bureau, The Consumer Credit Card Market 12 (Oct. 2023), available at https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit- card-market-report_2023.pdf.

24. Sheila Bair, How the Capital One/Discover Deal Could Boost Competition, Financial Times (May 31, 2024), https://on.ft. com/4640E6h.

25. Shahid Naeem, Capital One-Discover: A Competition Policy and Regulatory Deep Dive, American Economic Liberties Project (Mar. 2024), available at https://www.economicliberties.us/wp-content/ uploads/2024/03/2024-03-20-Capital-One-Discover-Briefpost- design-FINAL.pdf.

26. Haelim Anderson, Paul Calem, & Benjamin Gross, Is the Subprime Segment of the Credit Card Market Concentrated? Bank Policy Institute (May 31, 2024), https://bpi.com/ is-the-subprime-segment-of-the-credit-card-market-concentrated.

27. Brown Shoe Co. v. United States, 370 U.S. 294 (1962).

28. Geoffrey A. Manne & E. Marcellus Williamson, Hot Docs vs. Cold Economics: The Use and Misuse of Business Documents in Antitrust Enforcement and Adjudication, 47 Ariz. L. R. 609 (2005), available at https://laweconcenter.org/wp-content/uploads/2005/01/47arizlrev609. pdf.

29. See also, Diana Moss, The Capital One Financial-Discover Financial Services Merger: A Test for the Biden Merger Agenda?, Progressive Policy Institute (Jun. 20, 2024), at 5, available at https://www.progressivepolicy.org/wp-content/uploads/2024/06/ PPI-Capitol-One-Discover-Commentary.pdf ("Both Capital One and Discover serve the non-prime credit card lending market, where some commentators note that the merger could raise interest rates and fees, thus widening gaps in wealth and income, particularly for at-risk communities.").

30. Ohio v. American Express Co., 138, S.Ct. 2274, 2276-77, 585 U.S. 529 (2018) ("Respondent... Amex... operate[s] what economists call a 'two-sided platform,' providing services to two different groups (cardholders and merchants) who depend on the platform to intermediate between them. Because the interaction between the two groups is a transaction, credit-card networks are a special type of two-sided platform known as a 'transaction' platform. The key feature of transaction platforms is that they cannot make a sale to one side of the platform without simultaneously making a sale to the other. Unlike traditional markets, two-sided platforms exhibit 'indirect network effects,' which exist where the value of the platform to one group depends on how many members of another group participate. Two-sided platforms must take these effects into account before making a change in price on either side, or they risk creating a feedback loop of declining demand. Thus, striking the optimal balance of the prices charged on each side of the platform is essential for two-sided platforms to maximize the value of their services and to compete with their rivals."

31. United States v. American Express Co., No. 15-1672 (2d Cir. 2016).

32. See, for example, Eric Emch & T. Scott Thompson, Market Definition and Market Power in Payment Card Networks, 5 Rev. Network Econ. 45.

33. U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger Guidelines 4.3 (2023), https://www.ftc.gov/system/files/ftc_gov/ pdf/2023_merger_guidelines_final_12.18.2023.pdf.

34. Capital One Financial Corporation, Earnings Call (Apr. 25, 2024), https://www.sec.gov/Archives/edgar/data/1393612/0000 92762824000164/a425-04252024cofearningstr.htm.

35. CFPB, supra note 15.

36. Id.

37. Larry Santucci, Secured Card Market Update, Federal Reserve Bank of Phila. (May 2024), https://www.philadelphiafed.org/-/ media/frbp/assets/consumer-finance/reports/secured-card-market-update. pdf.

38. Id.

39. Letter from American Bankers Association, Consumer Bankers Association & National Association of Federally-Insured Credit Unions to Bureau of Consumer Financial Protection (Apr. 24, 2023), https://www.nafcu.org/system/files/files/CFPB- 2023-0009%20Joint%20Trades%20Letter%20to%20CFPB%20 re%20Consumer%20Credit%20Card%20Market.pdf.

40. See Fair Isaac Corporation, FICO Research: Consumer Credit Score Migration (2018), https://www.fico.com/en/latestthinking/ white-paper/fico-research-consumer-credit-score-migration.

41. Alyssa Brown & Siobhán McAlister, Office of Research Blog: Credit Score Transitions During the COVID-19 Pandemic, Consumer Financial Protection Bureau (Jan. 25, 2023), https:// www.consumerfinance.gov/about-us/blog/office-of-research-blog-credit- score-transitions-during-the-covid-19-pandemic/.

42. Letter from Andres L. Navarrete, Executive Vice President, Head of External Affairs, Capital One to Brent Hassell, Assistant Vice President, Federal Reserve Bank of Richmond and Jason Almonte, Director for Bank Licensing, Office of the Comptroller of the Currency (Aug. 7, 2024), https:// www.federalreserve.gov/foia/files/capital-one-supplemental-information- 20240807.pdf.

43. Santucci, supra note 31.

44. Merger Guidelines, supra note 27 at 4.4.A.

45. Atilano Jorge Padilla, The Role of Supply-Side Substitution in the Definition of the Relevant Market in Merger Control, Report for DG Enterprise A/4, European Commission (June 2001), https://ec.europa.eu/docsroom/documents/2658/ attachments/1/translations/en/renditions/native.

46. See Andrew Becker, The Secret History of the Credit Card, FRONTLINE (Nov. 23, 2004), https://www.pbs.org/wgbh/pages/ frontline/shows/credit/more/battle.html ("By identifying lower-risk individuals in high-risk groups, Capital One was able to market to reliable consumers other companies wouldn't touch, says [Chris] Meyer [CEO of Monitor Networks]. In just six years, Capital One became the sixth-largest credit card issuer in the country. "When others were attacking the market with blunt instruments, Capital One used a scalpel," says Meyer.").

47. Capital One, supra note 28.

48. Spencer Tierney, What the Capital One-Discover Deal Could Mean for Bank Accounts, NerdWallet (Feb. 21, 2024), https:// www.nerdwallet.com/article/banking/capital-one-discover-dealimpact- on-bank-accounts.

49. Bank Policy Institute, supra note 20.

50. Becker, supra note 40.

51. Naomi Snyder, Capital One's Secret to Success, Bank Director (Aug. 15, 2022), https://www.bankdirector.com/article/capital-onessecret- to-success.