Amazon’s Whole Foods Deal Under Scrutiny

A group of Democrats in Congress sent a letter this week urging the U.S. Department of Justice and the Federal Trade Commission to conduct an in-depth review of Amazon.com Inc.’s (NASDAQ:AMZN) $13.7 billion deal to purchase Whole Foods Market Inc. (NASDAQ:WFM). The letter was signed by U.S. Representative Marcia Fudge and 11 other Democrats, including Senator Cory Booker.

The letter was made public by the United Food and Commercial Workers union (UFCW). The union represents many of the unionized grocery workers in the United States. UFCW President Marc Perrone said, “Amazon’s monopolistic desire to control the retail market and replace good jobs with automation is not only a direct threat to the hard-working men and women at Whole Foods, it’s also a direct threat to our economy and consumers.”

Amazon announced in June that it planned to buy Whole Foods. News of the deal sparked concerns that the deal would result in increased prices, reduce the quality of products, and harm employment. Amazon has disputed the notion it would monopolize the grocery industry, saying the combined company would have less than 3 percent of national grocery sales. Despite the concerns, many antitrust experts expect the Federal Trade Commission to approve the planned merger.

The lawmakers who signed the letter also want the review to include consideration the effects the deal could have on access to healthy foods in areas where residents may have limited access to fresh groceries. The letter said, “While we do not oppose the merger at this time, we are concerned about what this merger could mean for African-American communities across the country already suffering from a lack of affordable healthy food choices from grocers.”

In a response, Brian Huseman, Amazon’s vice president of policy, said Amazon and Whole Foods hope to expand access to fresh food. In his letter, Huseman said “We agree with you that access to food is an important issue for the country, and we share your goal of improving that access.” The letter continued on to say, “We deliver low-cost, healthy food to zip codes across the country that, before Amazon, had limited access to a large selection of high quality foods.”

The Federal Trade Commission is also looking into allegations that Amazon misleads customers about its pricing discounts as part of its review of Amazon’s agreement to buy Whole Foods. A complaint was brought by the advocacy group Consumer Watchdog, which claimed that deceptive list prices make Amazon prices look like a bargain when they aren’t. The advocacy group asked the FTC to stop Amazon from buying Whole Foods while the deceptive discounting is occurring. Amazon settled similar allegations with Canada’s Competition Bureau in January and paid a C$1 million ($756,658.60) fine as part of the settlement.

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