US regulators said that they are still undecided on their stance regarding the antitrust claims put forward by competitors against Amazon’s $13.7 billion deal to acquire Whole Foods. Democrats have alleged that the acquisition will affect consumer choice, especially in those stores where lesser options for food shopping are available. Whole Foods had assured investors that the deal might go through within the second half of 2017, but at the same time warned them that it could also take as long as May 2018 to be finalized.
Many people in the industry, however, feel that the deal will go through, even after the regulators are done with their investigations.
Analysts stated that this deal with Whole Foods would ensure that customers can purchase foods and groceries at a lower price and also have these delivered to their homes. These analysts also point out that the acquisition will in no way undermine the current competition in the market from companies, such as Walmart and others.
Anti-trust issues regarding the Amazon-Whole Foods deal
This merger has come at a time when the government is already worried about the effects of consolidation in various sectors such as airlines, telecommunications, and banking. Many feel that Amazon’s entry into the retail food market will be disastrous for all other companies running a similar business, as they would not be able to compete with the major conglomerate known for its online shopping portal.
President Donald Trump himself said during his campaign that Amazon suffers from anti-trust problems and the Democrats have made anti-trust a big part of their economic agenda. Amazon will submit the paperwork regarding the governmental review of its Whole Foods deal with the Federal Trade Commission.
Backlash from the Amazon-Whole Foods merger
Just after the announcement regarding the deal was made publically, the shares of rival supermarkets plunged in the market. People were anticipating the entry of Amazon into the sector and thus were predicting rival companies to suffer tremendous losses as a result of the deal. The supermarket industry in the country has already experienced the effect of consolidation, with many smaller businesses closing their doors, declaring bankruptcies, and forming mergers with other bigger companies.
Bearing in mind these adverse effects, a group of Democrat politicians from Ohio wrote a letter to the Department of Justice and the Federal Trade Commission seeking assurance that they would prevent the merger from moving forward, claiming that the deal would considerably decrease the chances of African-Americans to acquire reasonably priced foods and groceries. So, it seems that at this point in time the deal will remain on hold until the regulators decide.
