Amazon Acquisitions

US Lawmaker Calls For Hearings On Amazon’s Whole Foods Bid

Amazon is facing calls from a U.S. lawmaker for Congressional hearings on its $13.7 billion bid for grocery store chain Whole Foods Market.

According to a report in Bloomberg News, last week U.S. Representative David Cicilline, a Democrat from Rhode Island, sent a letter to the House Judiciary Committee calling for a hearing on the acquisition, arguing a monopoly has hurt wages for workers and created a “gross inequality in the workplace.”

Amazon’s proposed acquisition of Whole Foods supermarket “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 wrote, according to Bloomberg.

The call on the part of the lawmaker comes as Doug Kass, a hedge fund manager, has shorted shares of Amazon, saying antitrust concerns will hurt its stock price.  “My understanding is that certain Democrats in the Senate have instituted the very recent and preliminary investigation of Amazon’s possible adverse impact on competition,” he wrote in a blog post last week.

Meanwhile, last month Goldman Sachs, in a note to clients, said investors may have overlooked risks associated with regulatory issues. That hasn’t stopped the stock from surging, given the fact that the majority of Wall Street analysts have played down the potential impact from regulations. They argue Amazon doesn’t have a big concentration in any one product category and is known for keeping the price low for consumers.

Amazon’s acquisition of the grocery chain is expected to close at the end of this year. It marks the largest deal by Amazon and is part of its push to not only dominate the eCommerce and delivery world but also get shoppers into physical retail stores.  

Amazon’s deal to acquire Whole Foods supermarket has prompted speculation that Walmart could step in make a bid, with JPMorgan recently floating the idea. In a research report late last month, it wrote: “From our perspective, we have a hard time seeing Kroger, Costco or Target coming in over the top. We do think there is a chance that Walmart makes a bid. There are compelling reasons for it to do so (adding new, generally wealthier customers; acquiring a strong brand; generating synergies and efficiencies; et al), in addition to keeping Amazon out of its wheelhouse.”


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