Ama­zon an­titrust concerns emerge in Wash­ing­ton and Wall Street

Muscat Daily - - BUSINESS -

Seat­tle, US - Ama­ Inc’s ex­pan­sion plans, in­clud­ing its agree­ment to buy Whole Foods Mar­ket Inc for US$13.7bn, are rais­ing hack­les in Wash­ing­ton - and Wall Street is tak­ing no­tice.

A US law­maker has called for hear­ings on the pro­posed deal to con­sider its ram­i­fi­ca­tions for shop­pers and work­ers. Hedge­fund man­ager Doug Kass has taken a short po­si­tion on the fast-grow­ing on­line re­tailer, say­ing gov­ern­ment an­titrust concerns will erode its value. In June, Gold­man Sachs is­sued a note ques­tion­ing whether tech stocks are over­priced and whether in­vestors have over­looked the risks associated with po­ten­tial gov­ern­ment reg­u­la­tory is­sues.

Still, Ama­zon’s shares have gained 34 per cent this year, ris­ing to US$1,003.21 at 2.01pm on Fri­day in New York. Ex­perts and an­a­lysts have largely dis­missed an­titrust threats for the world’s largest on­line re­tailer be­cause the com­pany doesn’t have large mar­ket con­cen­tra­tion in any one prod­uct cat­e­gory and it has a track record of help­ing keep prices low for shop­pers. A key le­gal ques­tion is whether Seat­tle­based Ama­zon has grown to the point of dis­cour­ag­ing in­no­va­tion from com­peti­tors.

“There’s a con­cern Ama­zon might be getting too big,” said Michael Car­rier, an­titrust ex­pert at Rut­gers Univer­sity School of Law in New Jer­sey. “The odds are the Whole Foods ac­qui­si­tion will go through, but th­ese po­lit­i­cal winds will cre­ate a bit of a fight.”

US Rep­re­sen­ta­tive David Ci­cilline, a Demo­crat from Rhode Is­land, on Thurs­day wrote a let­ter to the chair­man of the House Ju­di­ciary Com­mit­tee re­quest­ing hear­ings about Ama­zon’s Whole Foods ac­qui­si­tion, say­ing the deal was part of a wave of con­sol­i­da­tion that has ‘de­creased wages and re­sulted in gross in­equal­ity in the work­place’.

‘Ama­zon’s pro­posed ac­qui­si­tion of Whole Foods raises im­por­tant ques­tions con­cern­ing com­pe­ti­tion pol­icy, such as how the trans­ac­tion will af­fect the fu­ture of re­tail gro­cery stores, whether plat­form dom­i­nance im­pedes in­no­va­tion, and if the an­titrust laws are work­ing ef­fec­tively to en­sure eco­nomic op­por­tu­nity, choice and low prices for Amer­i­can fam­i­lies’, Ci­cilline wrote.

CVS Health Corp is based in Rhode Is­land and an­a­lysts have spec­u­lated that Ama­zon could use Whole Foods’ re­tail lo­ca­tions to launch a phar­macy busi­ness.

Also on Thurs­day, Kass, owner of Seabreeze Part­ners Man­age­ment Inc, an­nounced in a blog post that he was short­ing Ama­zon due to risks of an­titrust is­sues. ‘My un­der­stand­ing is that cer­tain Democrats in the Se­nate have in­sti­tuted the very re­cent and pre­lim­i­nary in­ves­ti­ga­tion of Ama­zon’s pos­si­ble ad­verse im­pact on com­pe­ti­tion’, he wrote.

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