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.
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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.
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“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