Brief Amazon-Whole Foods Probe Sparks Transparency Questions

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By Alexei Alexis

The Federal Trade Commission’s practice of saying little or nothing to the public about its merger probes is under the spotlight in the wake of the agency’s speedy approval of Amazon.com Inc.’s merger deal with Whole Foods Market Inc.

Some public interest groups were outraged by the FTC’s decision to clear the $13.7 billion tie-up within a 30-day review period, which is normally reserved for simple mergers. Compounding those frustrations, the agency issued a brief statement that offered no explanation as to how it reached its decision.

“This seems like a case that would have benefited from a closing statement” with more details, Rutgers Law School Professor Michael Carrier told Bloomberg BNA. “It’s not a surprise that the FTC didn’t challenge the merger given that Amazon and Whole Foods are not direct competitors. But Amazon’s size and expansion into multiple markets offered a setting in which the FTC could have explained what would have presented competitive concern in the future.”

Carrier was part of an American Bar Association task force that called for increased transparency at the FTC in a number areas, including greater use of public closing statements for major mergers that clear the agency. The task force’s recommendations were included in a January 2017 presidential transition report.

Republicans Underwhelmed

Republican officials in Washington are less concerned about the deal’s potential impact, and they didn’t fault the FTC for clearing it quickly without much discourse.

“From a traditional antitrust perspective, this deal isn’t all that interesting,” Sen. Mike Lee (R-Utah), chairman of the Senate Judiciary Committe’s antitrust subcommittee, said in an e-mailed statement to Bloomberg BNA. “In fact, Amazon has already announced some price cuts, because it’s able to leverage its supply chain.”

Joshua Wright, a former Republican commissioner at the FTC, said the deal was “relatively straightforward” and would have been cleared by any administration over the past 40 years.

Wright also said he is “sympathetic” to the view that the U.S. antitrust agencies should provide meaningful closing statements when warranted, but it isn’t necessary in Amazon-Whole Foods. Closing statements from the FTC “are most valuable when a proposed acquisition raises novel or close calls of antitrust law. This deal didn’t,” he told Bloomberg BNA.

Online Dominance

Some public interest groups and congressional Democrats wanted the FTC to consider Amazon’s growing control over online commerce as part of the agency’s review.

“The FTC apparently choose to ignore Amazon’s online dominance and instead focus narrowly on groceries,” Stacy Mitchell, co-director of the Institute for Local Self-Reliance, which advocates for communities and independent businesses, told Bloomberg BNA.

“The other dismaying aspect of this is that the FTC did not offer any explanation,” she added. “It did not explain how it chose to view this deal, what it investigated, or its conclusions. There is zero public transparency.”

The FTC rarely comments on why it closes antitrust investigations, according to FTC spokeswoman Betsy Lordan. When it does so, the comment usually takes the form of a public closing letter.

Demands for Detail

Sen. Amy Klobuchar (D-Minn.), ranking member of the Senate Judiciary Committee’s antitrust subcommittee, said in an Aug. 25 statement that she’ll be calling on the agency to explain itself.

“Amazon’s increased access to data on consumers and their behavior, and its dominance in internet retail sales, raises questions about whether this merger harms consumers and suppresses competition,” Klobuchar said.

Rep. David Cicilline (D-R.I.), the ranking Democrat on the House Judiciary Committee’s antitrust subcommittee, echoed those concerns. “Even though I did not oppose this merger, I am disappointed that Congress and the FTC did not take the time to study it in full,” he said in an e-mailed statement to Bloomberg BNA. “Amazon’s acquisition of Whole Foods could have a huge impact on consumers, workers, and innovation.”

Going forward, Cicilline said it will be important for Congress to consider ways to modernize antitrust laws to consider the impact of large corporate mergers on workers and consumers.

Liz Crampton weighs in on this issue for her weekly antitrust column. She can be contacted on Twitter at @liz_crampton.

—With assistance from Liz Crampton.

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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