Congressman Wants Hearing on Amazon’s Whole Foods Deal
Speculation that Amazon’s purchase of Whole Foods Market might spark legal backlash came to fruition this week as U.S. Representative David Cicilline (D-RI), the top Democrat on the House of Representatives Judiciary Committee’s antitrust panel, called for the subcommittee to hold a hearing on the online retail giant’s latest acquisition.
In a statement released Thursday, Cicilline noted that while he had doubts that Amazon’s purchase of Whole Foods could lead to cost increases for consumers, he remained concerned that if the deal could have a potentially long-lasting, negative impact on neighborhood grocery stores and their employees.
“Without taking a position on the legality of the transaction under the antitrust laws, 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 said. “While several leading antitrust scholars have expressed doubt that the transaction will result in higher prices for consumers, it nevertheless occurs amidst waves of consolidation in recent decades that have decreased wages and resulted in gross inequality in the workplace.”
Cicilline added that news of the deal was already impacting the market and that other grocery retail chains would suffer from the acquisition.
The $13.7 billion deal announced last month sparked many critics to wonder whether Amazon is treading towards becoming a monopoly, while others jumped to the retailer’s defense. The deal must be approved by U.S. antitrust enforcers before it can go through.
Potential antitrust action against Amazon came as no surprise to some prominent investors. According to Reuters, hedge fund manager Douglas Kass of Seabreeze Partners Management Inc. announced plans earlier this week to short Amazon stock because of rumors of coming antitrust action on Capitol Hill.
As a candidate, President Donald Trump warned that Amazon owner Jeff Bezos has a “huge antitrust problem” and said that the company might have “problems” under his presidency. The president has also been a vocal critic of another Bezos-owned company, The Washington Post.
But politicians aren’t the only ones looking to pump the breaks on the Whole Foods acquisition. Last week, Whole Foods shareholder Robert Riegel filed a federal lawsuit in the U.S. District Court for the Western District of Texas, seeking to halt the deal, claiming that shareholders were misled and not properly informed of the details. The deal was approved by Whole Foods Market’s board of directors, but has not been voted on yet by shareholders.
