Amazon's blockbuster thirteen point seven billion dollar deal to buy Whole Foods is a step toward dominating every part of the consumers shopping experience. It's by far the largest acquisition in the company's history, and some say it may cause a seismic shift in the seven hundred billion dollar grocery store business. Amazon already competes in a broad range of retail, from clothing and home goods to music and comic books.
So when does Amazon become so big and stifle so much competition in the retail sector that it is subject to antitrust scrutiny. Here to answer that question and many more is Bloomberg Intelligence senior litigation analyst Jennifer ree Jen. Is there an antitrust issue with the Amazon Whole Foods merger?
You know, it doesn't seem likely June. You know, I, I know there's always a reaction when there's a really big deal like this in a company like Amazon that's that's dominated a lot of industries and is now moving into another industry. But you know, at the end of the day that there is a framework. We have a framework and laws that have been interpreted by the court over time that really just don't put this merger in a place that seems like it might concern antitrust regulators.
You know, you don't have a major horizontal overlap. They aren't competitors with each other. And to the extent there even are vertical issues here, which is sort of like two companies within a supply chain, one acquiring the other, like like a manufacturer acquiring the input supplier. Um, you don't, you don't have some of the harm they can often come from vertical mergers in this merger, either because Whole Foods isn't very dominant, particularly in grocery. But there are
some congressmen already calling for a look at this. Representative Rokana, a Democrat representing California in the House of Representatives, said the Justice Department and the Federal Trade Commission must undertake a review that considers not just the merger's impact on prices, but also the impact on jobs and wages. So people, even congressmen, are saying, this is so big and it's just getting bigger and bigger. That's right, And I think that this goes back to kind of a debate that
is going on a little bit in the anti trust world. Now, the law has developed over the last twenty years in a certain way, you know, such that they're very specific kind of harms and consumer welfare that's protected by the antitrust laws. You know, they try to make sure that we have a healthy competitive market such that consumer prices
stay low. But there are some that believe that this has failed the American consumer, that over time that the way antitrust has been enforced has created too much consolidation and too much concentration in many industries that ultimately can have affect consumer wages, can even affect you know, political concentration.
And so there is this this debate that's ongoing, and I think that statement by by that representative sort of is on that side of the debate that we need to change per HAPs our approach, our our antitrust philosophy. And now but putting aside that debate June, you know, and whether or not we do need to change our philosophy here in the United States or not, or how
we approach these things. The way the law developed has developed today, and the tools we use traditionally today to assess a merger's potential harmful effects in the market simply are unlikely to find that this merger is anti competitive. During the campaign, President Trump said that Jeff Bezos has a huge anti trust problem because he's controlling too much, and that it that went under his watch, he would be looking at those problems. Might that impact what goes
on in terms of review of this deal. Well, I think we have to look at think about two different things now. The first thing is his statement about Amazon controlling just too much and being too big under our antitrust laws. Even right up in the Federal Trade Commission's website, it says it is not unlawful for a company to be big and to be powerful, and even to charge high prices, as long as that position was obtained in a fair manner, not through unfair or unreasonable acts to
harm their competitors and to prevent new entry. So the fact of the matter is, if Amazon has gotten big and powerful, um as President Trump has pointed out, through fair methods of competition, that is what it is, and it doesn't violate our antitrust laws. So that's on one side. And on the other side, you know, we do have a Federal Trade Commission and Department of Justice that are meant to operate independently and and even if the President
tries to influence what they do here. They assess these deals using a set a set of guidelines that they've used that have developed over time, that are ingrained. They use economic analysis to apply to these deals to ask whether they have the potential to cause harm or whether there could be an incentive to cause harm. And they're really only going to take one of these deals to court where they have evidence to back them up. Suppose this deal goes through and and we find at the
grocery competitors are struggling or going out of business. Is there anything that can be done at that point legally, Well, it will depend on what it is that's causing them to struggle and go out of business. If they simply just are not as efficient and are struggling because they can't meet lower prices, their prices are too high, they're losing customers, they can't gain internal efficiencies that allow them to lower those prices. They're just struggling against greater competition.
You know that perhaps there isn't recourse under the antitrust law. However, if after the merger there is some allegation that that Amazon and Whole Foods, it's it's subsidiary. Let's say, Whole Foods have done engaged in unfair competition to try to prevent new entrants in delivering delivering groceries or new entrants in grocery. You know, there might be a legal case there, you know, such as entering let's say exclusive deals that
that keep a source of supply from competitors. Things like that. Now, a different deal, Draft Kings merger with fan Duel, is facing a challenge by the US according to Federal Trade Commission. Tell us a little bit about that. Well that Now, see, if I had been a betting person, I think I would have bet against this deal going through back when it was announced in November two thousand sixteen, because you know, we have these two companies and what they do are
they are you know, online gaming. They are daily sports fantasy league. So people can pick go in and pick a player and create a team, and they game by game look at how their players do, and they can win prizes in money on that basis. And what the FTC said is, hey, you're the only two pretty much of the market controlled by the two of you, and
that's really a clear case of monopolization. Um so I think it's not a surprise that the FDC chose to go and it was two to zero vote by the commissioners, one Democrat and one Republican to go after this deal. So is there any response that the two can give
to save the deal? You know, I think they probably believe they have a good argument that the market should have been defined the competitive market should have been defined more broadly, because they may say, well, hey, we also compete against online gaming entities that allow you to bet for the season. Let's say pick a game, pick a team with players, see how they do for the season, and perhaps even other kinds of sports fantasy leagues and
betting and things like fantasy teams. And if you go broader and you define that market more broadly, their combined shares probably much lower and might not trigger this sort of Hey, this has the harm to potential to harm competition. But obviously the FDC didn't buy that. Jennifer, it's always a pleasure to have you on. You break down antitrust into the simplest, most understandable terms. Thank you, and we
appreciate it. And for more of Jennifer's analysis, go to VI I go on the Bloomberg terminal that's Jennifer Ree. She's a senior litigation analyst at Bloomberg Intelligence