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US: Amazon’s deal is likely to pass antitrust scrutiny

 |  June 18, 2017

Amazon has sent changes the grocery store market with its $14 billion bid to buy Whole Foods reports Bloomberg. The deal will add an additional $16 billion in revenue to Amazon’s already enormous top line, which is expected to hit $200 billion next year.

US antitrust laws are geared toward ensuring consumers benefit from business activities — primarily considered in terms of price level and access to products, not level of competition.

It seems likely that this will be the case. Amazon’s logistics capabilities could bring down the cost of products sold at Whole Foods by allowing for greater purchase orders and efficient delivery. Listing Whole Foods products on Amazon would also increase access for more people.

Furthermore, the deal is unlikely to decrease competition in a significant way. Whole Foods will continue to operate under its own name and Amazon’s expansion into groceries is not especially large, yet.

Also, despite Amazon’s existing interest in grocery, the Amazon–Whole Foods deal could be considered a vertical integration rather than horizontal, with e-commerce supply chain logistics serving as a middle step between food producers and Whole Foods the seller.

Amazon already tried to dictate prices to publishers of e-books, drawing suspicions of antitrust behavior. That opinion appears to have a friend in the White House. During the election, Donald Trump said Amazon CEO Jeff Bezos had “a huge antitrust problem because he’s controlling so much.” At least one lawmaker, Representative Ro Khanna, a Democrat from California, has already urged a review of the proposed deal.

Trump has talked about ratcheting up antitrust enforcement. But the Trump administration’s pick for top mergers cop, Makan Delrahim, is perceived to be a free marketer reports Bloomberg. And there’s been little push-back against deals. Earlier this week, Dow Chemicals and DuPont received approval for their chemical industry mega-consolidation. And all indications are that AT&T-Time Warner will get through as well.

Full Content: Bloomberg

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