Amazon’s proposed acquisition of Whole Foods has raised a number of antitrust concerns among lawmakers as well as with advocacy and retail groups.
Following the announcement of the proposed acquisition, the Advocates for Independent Business (AIB), which includes the American Booksellers Association, wrote a letter to leadership of the U.S. Senate and House of Representatives antitrust committees urging a hearing regarding the proposed merger; members of the Congressional Black Caucus, in a letter to the Department of Justice and the FTC expressed concerns over the merger; and the United Food and Commercial Workers International Union made public its plans to file a complaint with the FTC, as reported by the Washington Post.
In the meantime, Amazon announced plans to refile sometime next week its proposal to purchase Whole Foods. The hope for Amazon is that giving the FTC additional time to review the merger will help calm any apprehensions the agency might have over the deal, as reported by the Wall Street Journal.
After the proposed Amazon acquisition of Whole Foods was made public in mid-June, Rep. David Cicilline (D-RI), the ranking Democrat on the House Judiciary Antitrust Subcommittee, called for a hearing on Amazon’s proposed $13.7 billion acquisition of Whole Foods.
The AIB echoed Cicilline’s call for a hearing in letters sent to Sen. Mike Lee (R-UT), Chair of the Subcommittee on Antitrust, Competition Policy and Consumer Rights; and Sen. Amy Klobuchar (D-MN), the Senate subcommittee’s ranking member; and Rep. Tom Marino (R-PA), Chair of the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law; and Rep. Cicilline, the subcommittee’s ranking member. In the letters, AIB wrote: “Amazon’s bid to buy Whole Foods would only expand the company’s control of commerce, and it would give Amazon new assets that it can leverage to increase its power to harm competition in online shopping. These include physical stores to add to its package delivery logistics network; a significant new source of customer data; and a major beachhead in the large and very pivotal grocery category.”
In their letter to the Department of Justice and FTC, 12 Democratic lawmakers, all members of the Congressional Black Caucus, noted their concerns as to what the merger could mean for African-American communities throughout the country, which are already lacking affordable, healthy food choices from grocers. “This merger should be scrutinized beyond the normal antitrust review process that only examines the competitive impact,” the lawmakers state. “It should also include a careful review of the impact further consolidation will have on the communities representing many of the ‘food deserts’ across the nation.”
The legislators also point out the “declining presence” of retail stores due to the growth of online shopping. “Amazon wields considerable power in online retailing with its platform capturing nearly 45 percent of all online spending,” they write. “In the past few months, several major retailers have announced the closure of hundreds of stores nationwide. Many of the communities we represent may feel the impact of these announced closures.”
Last week, the United Food and Commercial Workers International Union, filed a complaint to the FTC, contending that if Amazon is allowed to buy Whole Foods, it will trigger a wave of store closures and would eventually quell consumer choice, as reported by the Washington Post.
“Amazon’s reach will ultimately reduce the number of grocery competitors that consumers can choose from,” Marc Perrone, president of the union, wrote in the complaint. “Regardless of whether Amazon has an actual Whole Foods grocery store near a competitor, their online model and size allows them to unfairly compete with every single grocery store in the nation.”
“I’ve got concerns, and our organization has concerns, about what technology does and at what cost to society,” Perrone told The Washington Post. “We don’t want to be Luddites about technology, but we’ve got real concerns about what happens to America in the future.”
The article noted that grocery stores have lost 11,000 jobs since last year, and supermarkets are down 3,000 workers from this time last year – this in part due to online food shopping, which has taken away a small percentage of business. But it is expected that this percentage will continue to grow.
In related news, in a letter to the FTC dated July 6, Consumer Watchdog, a consumer advocacy group, stated that Amazon deceptively inflated how much consumers save by using the online retailer, as reported by the Los Angeles Times. The study has prompted the FTC to “look into” the allegations as part of its broader review of the Amazon-Whole Foods acquisition, as reported by Reuters.
In its study, Consumer Watchdog said it found that at least half the list prices examined were greater than the prevailing market price, the LA Times reported. “There’s no real transparency about what the heck they’re doing,” John M. Simpson, privacy project director for Consumer Watchdog, told the Times. “At a minimum, there needs to be some clear understanding about how they’re coming up with these purported list prices.”
Commenting on the report, Amazon noted in a statement, “The study issued by Consumer Watchdog is deeply flawed, based on incomplete data and improper assumptions....The conclusions the Consumer Watchdog group reached are flat out wrong. We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.”