The Biden Administration Takes a Swipe at Credit Card Industry

  The Biden administration regulators see a monopoly boogeyman behind the curtain of nearly every business merger and acquisition -- from airlines to cellphones 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, because this acquisition by Capital One 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 the acquisition of two companies that control less than 10% of the market is anti-competitive is a proposition that borders on the absurd.

   For years the Federal Trade Commission 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% 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 millions 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. Ironically, in other lawsuits against the credit card industry, the FTC alleges credit card companies like Visa and Mastercard are colluding to keep fees high. In this one, the regulators are blocking a merger that will help nudge the interchange fees and interest payments down.

   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 who are trying to block this marriage. Sens. Josh Hawley (R-Mo.), a conservative, and Elizabeth Warren (D-Mass.), a liberal who hates big business, are loud skeptics as well.

   They should listen to Jamie Dimon, CEO of JPMorgan Chase, a direct rival of Capital One, who says, "Companies should be allowed to do and innovate and grow and merge ... If that's how they think they can best compete with JPMorgan, you should let them."   Amen. Government never reduces prices. The free enterprise system does.

  Stephen Moore is a visiting fellow at the Heritage Foundation and a senior economic advisor to Donald Trump. His latest book is: "Govzilla: How the Relentless Growth of Government Is Devouring Our Economy."

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