Date
21 September 2017
Antitrust experts had expected the deal to win government approval because Amazon sells few groceries and Whole Foods itself makes up a small fraction of US food sales. Photo: Bloomberg
Antitrust experts had expected the deal to win government approval because Amazon sells few groceries and Whole Foods itself makes up a small fraction of US food sales. Photo: Bloomberg

Amazon’s Whole Foods deal clears regulatory, shareholder hurdles

Amazon.com Inc. and Whole Foods Market Inc. cleared two major hurdles needed to close Amazon’s US$13.7 billion acquisition of the natural grocery chain, with approvals from a US competition regulator and Whole Foods shareholders.

The US Federal Trade Commission, in clearing the planned acquisition, said in a statement that it opted not to pursue its investigation further after reviewing whether the deal would substantially lessen competition or constituted an unfair method of competition, Reuters reports. 

Also on Wednesday, Whole Foods shareholders approved the proposed sale to Amazon.

The companies expect to close the deal later this year.

Amazon’s takeover of the pioneering organic and natural grocery chain, which sent a shockwave through the brutally competitive supermarket industry, would give it a foothold in the US$700 billion US grocery market, key for it to grab a greater share of shoppers’ wallets.

It would also give the world’s largest online retailer hundreds of brick-and-mortar stores where it could showcase products and ready packages for home delivery.

Amazon said on Wednesday it has achieved multiple steps to get to closing, but did not say if it needs any further regulatory approvals. There are no other US antitrust approvals needed. 

Amazon has frequently been in the crosshairs of US President Donald Trump, who last week took aim at the company over taxes and jobs, without offering any evidence.

Amazon’s CEO, Jeff Bezos, also owns the Washington Post, which Trump has also frequently criticized.

“Amazon is doing great damage to tax-paying retailers. Towns, cities and states throughout the US are being hurt – many jobs being lost!” Trump wrote in a tweet. Trump made no mention of the pending Whole Foods purchase.

Antitrust experts had expected the deal to win government approval because Amazon sells few groceries and Whole Foods itself makes up a small fraction of US food sales.

“The FTC quickly decided that the combination did not create a significant danger of lessening competition in any market,” Erik Gordon, a business professor at the University of Michigan, said.

The FTC “declined to block the deal based on a fear that a big, powerful company could use its muscle in some markets to reduce competition in another market. If Amazon actually does that, the commission can step in,” Gordon added.

In closing its antitrust review, the FTC said it “always has the ability to investigate anticompetitive conduct should such action be warranted”.

Feinstein emphasized that the approval “doesn’t immunize the transaction” if Amazon took anticompetitive steps after acquiring Whole Foods.

Critics had argued there was precedent to block the merger, since Amazon would be leveraging its retail and supply chain power to dominate a new market.

Consumer Watchdog, a group that had urged the FTC to take action to block the merger, said in a statement it was disappointed. “Apparently the only way to hold Amazon accountable for its abuse of consumers is at the state level,” the group said.

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CG

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