Scru­tiny urged on Ama­zon’s gro­cer buy

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - BRIAN FUNG

WASHINGTON — A House mem­ber is urg­ing Congress to hold a hear­ing to analyze Ama­zon’s pro­posed $ 14 bil­lion ac­qui­si­tion of Whole Foods, a merger that crit­ics say could cramp in­no­va­tion and hurt work­ers.

The deal could af­fect gro­cery stores and con­sumers na­tion­wide, Rep. David Cil­licine, D-R.I., the top Demo­crat on the House sub­com­mit­tee on reg­u­la­tory re­form, com­mer­cial and an­titrust law, warned Thurs­day in a state­ment: “Congress has a re­spon­si­bil­ity to fully scru­ti­nize this merger be­fore it goes ahead. Fail­ing to do so is a dis­ser­vice to our con­stituents.”

In a let­ter sub­mit­ted to the panel’s Repub­li­can lead­er­ship, Cil­licine high­lighted con­cerns about Ama­zon’s dom­i­nance in on­line re­tail and the po­ten­tial for the ecom­merce gi­ant to use its con­trol over Whole Foods to un­fairly dis­ad­van­tage other busi­nesses.

“This trans­ac­tion oc­curs dur­ing a long pe­riod of eco­nomic con­cen­tra­tion that has al­ready caused a

● de­cline in work­ers’ wages and mo­bil­ity,” the con­gress­man wrote, “essen­tially al­low­ing a small num­ber of mo­nop­o­lists to hoard the ‘fruit of eco­nomic growth.’”

Ama­zon de­clined to com­ment on the mat­ter. Ama­zon chief ex­ec­u­tive Jeff Be­zos also owns The Washington Post.

Cil­licine is not the only mem­ber of Congress to call for a close ex­am­i­na­tion of the deal. Rep. Ro Khanna, D-Calif., who

rep­re­sents a dis­trict in Sil­i­con Val­ley, told CNBC last month that the ac­qui­si­tion would “hurt lo­cal gro­cery stores.”

The deal could have ma­jor im­pli­ca­tions for the fu­ture of gro­cery stores and on-de­mand de­liv­ery ser­vices, an­a­lysts say. “It’s not what Ama­zon is get­ting from [Whole Foods] but more what Ama­zon can do with them, which is to bring its dis­tri­bu­tion into play,” said James Bai­ley, a man­age­ment pro­fes­sor at Ge­orge Washington Univer­sity.

Ama­zon’s pur­chase must be ap­proved by fed­eral reg­u­la­tors

— most likely at the Fed­eral Trade Com­mis­sion — be­fore it can pro­ceed. But an­titrust ex­perts dif­fer on whether the ac­qui­si­tion should raise red flags. His­tor­i­cally, deals in­volv­ing com­pa­nies in sep­a­rate in­dus­tries have got­ten a pass, par­tic­u­larly if they are likely to lead to lower prices. Ama­zon has made a cut­throat busi­ness out of price com­pe­ti­tion and proved a will­ing­ness to take fi­nan­cial losses.

Some­times, that has got­ten the com­pany into trou­ble. In 2013, Ama­zon set­tled an an­titrust law­suit filed by pub­lish­ers, in­clud­ing HarperCollins, Ha­chette and Pen­guin, who ac­cused Ama­zon of price-fix­ing on ebooks.

Still, some op­po­nents of con­sol­i­da­tion ac­knowl­edge that the Ama­zon-Whole Foods deal may be hard for reg­u­la­tors to re­ject.

“There are a lot of peo­ple spooked out by the enor­mous size of Ama­zon, but it’s not clear to me there’s any direct com­pet­i­tive harm in this trans­ac­tion,” said Gene Kim­mel­man, pres­i­dent of the con­sumer group Pub­lic Knowl­edge.

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