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Critics say Whole Foods deal would give Amazon an unfair advantage

From Reuters:

While antitrust experts expect Amazon.com Inc’s bid for Whole Foods Market Inc to win regulatory approval, some critics argue the deal should be blocked because it gives the online retailer a nearly unstoppable head start toward domination of online grocery delivery.

They argue the Whole Foods acquisition will give Amazon an unfair advantage over traditional grocers and new players that might emerge in the market, potentially grounds for the deal to be blocked for antitrust reasons.

“As a matter of policy, should this be blocked? …There should be a challenge to this because there should be a strong presumption against growth by acquisition and in fact there is supposed to be such a presumption in our law. It’s what Congress intended,” said Chris Sagers, a professor of antitrust law at Cleveland State University.

Amazon declined comment. Sagers and other critics urge regulators to prevent dominant firms from buying a major foothold in an adjacent industry.

. . . .

 Critics believe Amazon’s strengths in logistics, its scale and leverage with suppliers could enable it to dominate groceries as it did with bookselling. Antitrust experts who represent deals being reviewed by the Justice Department and the Federal Trade Commission said the transaction will be approved because Amazon sells few groceries and Whole Foods is a minnow in the grocery market with 444 U.S. stores compared with 4,692 for Wal-Mart.

. . . .

 “Competitors can be expected not to like a merger that puts more pressure on them. If their share price goes down, it’s a sign they’ll be under more competitive pressure,” said Alden Abbott, antitrust expert at the Heritage Foundation.

Link to the rest at Reuters

 

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29 Comments to “Critics say Whole Foods deal would give Amazon an unfair advantage”

  1. ADS critics say Amazon doing anything at all is an unfair advantage!

    “While antitrust experts expect Amazon.com Inc’s bid for Whole Foods Market Inc to win regulatory approval, some critics argue the deal should be blocked because it gives the online retailer a nearly unstoppable head start toward domination of online grocery delivery.”

    Anybody can be a critic – even idiots that don’t even understand what they’re being critical of. Experts on the other hand are suppose to know something about the field(s) they are experts in.

    “Sagers and other critics urge regulators to prevent dominant firms from buying a major foothold in an adjacent industry.”

    Where were these guys when AT&T started doing TV services or when Time Warner and Comcast went from cable TV to internet/phone providers (and who owns CBS?)?

    Sorry Sagers and friends, but if TWC can charge me more for internet just because I don’t want their cable TV offerings then Amazon can buy and sell whatever they like.

    • This^

      Now that TWC sold out to Bright House which has been sold to Spectrum (Charter), they have raised the prices about $50 in the last few months.

      It’s pretty much a monopoly where I live.

      Same thing with the power company. I only have one option.

      If only Amazon would offer internet services….

  2. Sorry Sagers and friends, but if TWC can charge me more for internet just because I don’t want their cable TV offerings then Amazon can buy and sell whatever they like.

    Dos that mean the package deal is cheaper then the sum of the individually priced components?

    • $60 a month for 50Mbs down internet ‘only’. (Bought my own modem to save the $6 a month charge for ‘renting’ theirs.)

      It’s ‘only’ $30 a month for 100Mbs down internet ‘if’ you also buy in to their $30 a month cable TV (and $X per month for boxes) and $30 a month for their phone service (which of course you can’t call them if the internet dies because the phone is VOIP.)

      So $60 for one (set slower) service vs $90 to throw in things you don’t want/need.

      Since they are losing so many TV ‘cord cutters’ they’re making up for it with overcharging for their internet.

      Only other game in town is A&AT’s Uverse, and not only do they charge more for lower speeds – they have data caps to charge you even more when they claim you go over your cap. (And last I checked, they were getting kickback for their data meter claiming you’d used more than you actually had.)

      • Do you also get charged a fee for sports channels when you don’t watch any sports and don’t want it?

        I hate Spectrum with such a passion. If AT&T weren’t worse, I’d probably switch.

        • Well they’ve got to prop up ESPN! Which was one of many reasons for cutting out the TV services.

        • It’s very hard to determine incremental charges for cable channels. We can’t say the fact that a channel is in a package means we are paying for it.

          Some channels pay the carrier to host their channel. So, the carrier just adds it to the package. Removing it wouldn’t change the consumer’s bill.

          The Yucca Lily Channel, specializing in yucca lilies around the world, pays the carrier to include its channel. Then the Yucca Lilly channel sells advertising to plant food and flower pot companies, and manages to get more in revenue than they pay the carrier.

          Meanwhile, I sit at home fuming that I can’t unpack channels because I think I’m paying for Yucca Lily Round Up with Seedy Stemlock.

      • What does it cost to get TV only? No internet or phone?

        • More than $30 it seems – not that I’m interested in supporting ESPN and the other junk. I tell them when they try to call that their lineup isn’t worth the money they want.

          Want a really good joke? My brother (lives in the same town) told them he’d take a combo pack – if they could do it for under a hundred per month (counting taxes). They couldn’t, between TV boxes (he has digital TVs, but they like to play their little games) and the VOIP modem for the phone/internet bit they couldn’t manage it.

          So before they think they need to break up Amazon I want to see them crack TW/Comcast and the like first.

          • So before they think they need to break up Amazon I want to see them crack TW/Comcast and the like first.

            What good would breaking up either Amazon or Comcast do?

            In many municipalities, government has screwed up the cable market. They initially limited access to one company, letting it build out its network. (And strategically place lines on poles so there is no room for another cable.)

            Other towns allowed access by multiple companies.

            So, some places have more competition than others.

            Government has a poor record in managing access to cable service.

  3. Ashe Elton Parker

    These people apparently think everybody can afford to shop at this one grocery store. At the prices Whole Foods charges for what is at my local Whole Foods store a smaller selection of food than the wider variety I can often buy for a far more reasonable price at my local Smith’s Marketplace, I won’t be shopping there anytime soon, even if they do offer to deliver the food (for which they’d probably tack on a delivery fee). I just don’t have that sort of money.

    Fools, the lot of ’em.

  4. R. L. Royall, Jr.

    IIRC Walmart and Safeway both do online groceries. Remind me again how this is a monopoly when there are existing (large) players in this market?

  5. there are a lot of reasons for rural folk to look with a jaded eye at all this. Partly because the corp presence of small grocery/trading posts in the towns can, like doctors and health services that are corporate and just keeping a bare presence in small towns and rural areas, disappear overnight

    For persons who have jobs at whole foods now ,changes are coming that will reduce workforce at person to person level, likely. In the cities where ther are wf, often people from small towns surrounding work there, as they cannot afford to live in the city, but its a short commute from their domecile they can afford.

    Im not sure sometimes speed or ‘disruption’ is more important than anything. Machinery dies from friction of parts. Human beings do better in not just jobs that pay well, but that they like, that carry meaning and comraderie for them “

  6. Nobody knows what Amazon might do with Whole Foods. Generally speaking the legal system does not penalize entities based on what they ‘might do’ but based on what they ‘have done’.

    Given that Amazon does not have monopoly power in any market I don’t see how that one Cleveland professor determines that buying Whole Foods triggers this part of the Sherman act…

    A Section 2 monopolization violation has two elements:

    (1) the possession of monopoly power in the relevant market; and
    (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

    • Felix J. Torres

      That first clause is a doozy and very amenable to political manipulation. It has been done.

      The professor simply has to define the “relevant market” as “online only dry goods retailer with no significant B&M storefronts” or “online ebook retailer with proprietary eink hardware” to pin a 90% market share on Amazon and claim monopoly power.

      • And monopoly power is only illegal if they are using it to charge more than before. If customers’ prices are the same or going down, there’s no violation of the Sherman act.

        • Felix J. Torres

          But being legally declared a monopoly would expose them to a zillion roadkill lawsuits. Microsoft didn’t raise prices; they were *saving* people money ($40 per sale to developers, reflected downstream to consumers) yet they got clobbered for doing the same thing Apple, IBM, and others were doing.

          Antitrust is…volatile…and undefined once it gets rolling. It all hinges on the judge.

        • The economic argument against monopolies is that they control supply. But, they don’t control the demand curve.

          So, a monopoly will choose the point on the demand curve where it maxes profit, given its production capacity. At this point, it is at a demand curve point with lower output, and higher prices.

          So, society gets fewer goods at higher prices.

          Amazon screws this all up with more goods at lower prices.

          Acting against Amazon would entail reducing available goods, and raising prices. And that is exactly what anti-trust is designed to prevent.

          This is a difficult one for the anti-Amazon folks. They are falling back on the traditional Progressive position that government must protect producers over consumers.

  7. Al the Great and Powerful

    I might have felt like you, USAF, but I’ve seen how much better price and selection we get from the few big box stores that came to my tiny island home. In the 70s, we had to go to the Mainland to shop for big items and major home furnishings if we didn’t like the paltry selection at local stores. Then all those things had to be shipped and trans-shipped in Honolulu before eventually being delivered here.

    Those mom and pop stores that employed tiny staffs and couldn’t exploit economies of scale couldn’t compete when the boxes came in, so now we have more people employed and lower prices and VASTLY expanded selection.

    Now, maybe if the boxes had come in, blown away the mom and pops, then jacked up prices or moved out, I’d feel bad. But they haven’t. I’ve got to judge them on ‘what they have done’ here.

    And I don’t believe there has been a terrible blow to quality of life from the change, except for a scant handful of owners. I’ve had small retail and big retail jobs, and neither did much for the quality of my life except for providing funds and benefits so I could attain quality outside of work. Though working in a big box bookstore was nice, like working in the library would be nice.

  8. Patricia Sierra

    Today, my broker sent me an article in which it was claimed that Amazon’s stock will be a losing investment because Walmart is doing a masterful job of leaving Amazon in their dust. The complete turnaround re Amazon stock was said to be complete in five years. I told him Walmart may be doing so swell stuff, but Amazon isn’t going to sit still for the next five years so I’m going to sit tight with the stock.

    • Ouch, your ‘broker’ just wanted you to buy/sell something so he/she sees a commission. Sounds to me like it’s time to find a broker with an IQ higher than my shoe size. (Me has big feet – but not no dang clown feet! 😛 )

      • No, he wasn’t trying to get me to sell the stock. He just knew the article would hit my hot button. He sent it with a subject line that said “Any comment?” knowing I’d have a lot to say about it. Yanking my chain.

      • Yeah, my thought, too. Broker wants to churn some stock sales so broker won’t be broke.

        And, per your reply, broker sounds like he’s fishing for data/info on what stock prices at Zon and WallyWorld will be headed in the future.

        Who says stock market mavens actually know anything about real-world financial trends?

        • Patricia Sierra

          He was truly just sending me a negative article about Amazon to tease me. He knows I won’t sell Amazon, no matter what And he doesn’t churn. He’s a white hat.

  9. Critics say [X] would give Amazon an unfair advantage

    Maybe we just need a bot to subscribe to a news wire that keys off of mentions of Amazon and writes these articles.

  10. By this logic, Whole Foods Market Inc was already on its way to dominating the market and should have been stopped.

    • Felix J. Torres

      Yes.
      That is why that particular camp prefers European antitrust theory (protect competitors) over American theory (protect consumers). It allows them to intervene to skew the playing field at will to penalize the successful, especially the innovative and the first movers.

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