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As of today, it is less than a month - August 23, to be precise - until Whole Foods shareholders will vote on the proposed $13.7 billion acquisition of their company by Amazon. But while the time is short until that vote, there are a lot of moving pieces that have to fall into place for the purchase to actually take place.

For example ... The Washington Post reports that Rep. David Cillicine (D-Rhode Island), who serves on the US House of Representatives subcommittee on regulatory reform, "is urging Congress to hold a hearing to analyze Amazon's proposed $14 billion acquisition of Whole Foods, a merger that critics say could cramp innovation and hurt workers ... In a letter submitted to the panel's Republican leadership, Cillicine highlighted concerns about Amazon's dominance in online retail and the potential for the e-commerce giant to use its control over Whole Foods to unfairly disadvantage other businesses."

Cillicine argues that the proposed $13.7 billion acquisition of Whole Foods by Amazon "occurs during a long period of economic concentration that has already caused a decline in workers' wages and mobility ... essentially allowing a small number of monopolists to hoard the ‘fruit of economic growth."

The Post (which, it should be noted, is owned by Amazon founder/CEO Jeff Bezos in a private investment), writes that "Cillicine is not the only member of Congress to call for a close examination of the deal. Rep. Ro Khanna (D-Calif.), who represents a district in Silicon Valley, told CNBC last month that the acquisition would 'hurt local grocery stores'."

That's not all.

Reuters reports that a group of Congressional Democrats - including Sen. Cory Booker of New Jersey - has "urged the U.S. Department of Justice and Federal Trade Commission in a letter this week to conduct a more in-depth review of online retailer Amazon's plan to buy grocer Whole Foods.
The lawmakers asked that the review include consideration of what effect the $13.7 billion deal could have on - including access to - healthy foods in so-called food deserts where residents may have limited access to fresh groceries."

And, GeekWire reports that the "United Food and Commercial Workers International Union, an organization that represents more than 1 million retail workers across the U.S., has come out with criticisms of Amazon’s $13.7 billion deal to buy Whole Foods Market, saying that the deal could hurt customers and workers and lead to significant automation of jobs. In a letter to the Federal Trade Commission, UFCW President Marc Perrone called Amazon an 'online retail monopoly' and argued that 'the scope and weight of Amazon’s digital reach poses a severe and constant economic threat to consumers, retailers, and especially grocers, irrespective of whether they’re located online or are traditional brick-and-mortar stores'."

The Associated Press reports that "Amazon is just one of several major tech companies — such as Google and Facebook — facing new scrutiny over their market power, which doesn’t map neatly onto traditional notions of monopoly.

"When a company dominates a market, it typically pushes up prices to boost profits — something U.S. antitrust law is geared to prevent. Amazon, however, has a track record of keeping prices low and locking customers in to sell more stuff. For instance, the company typically sells gadgets like its tablets for little or no profit — but then pushes people to buy digital movies they can watch on the tablet."

Indeed, the Seattle Times writes that "a key legal question is whether Seattle-based Amazon has grown to the point of discouraging innovation from competitors." And the Times goes on to say that it really all depends on how regulators want to define competition: "Most analysts aren’t worried about the Whole Foods deal being derailed by antitrust probes, partly because the food-store chain had just 1.6 percent of the U.S. grocery market, according to Euromonitor. It is dwarfed by operators such as Wal-Mart Stores, which has more than 26 percent of the market, and Kroger with 10 percent." In fact, Amazon has a smaller market share in terms of food that Whole Foods, which would make an antitrust challenge unorthodox at best.

The Wall Street Journal reports that while Whole Foods shareholders will vote next month, Amazon actually is trying to remove some of the pressure on the government to make a decision.

According to the story, "The government’s initial 30-day clock for reviewing the deal started June 23, a week after Amazon announced its plans to acquire Whole Foods for $13.7 billion including debt. But in a corporate filing Friday, Whole Foods said Amazon would re-file documents next week seeking government approval on the deal, effectively re-starting the clock and removing some of the deadline pressure.

"Companies sometimes use the tactic in the hopes that antitrust enforcers will get comfortable enough with their transaction during the extended initial review that they will agree to forego a longer probe."

And if this is not enough ... CBS News reports that the Federal Trade Commission (FTC) is investigating whether Amazon;'s discounts are everything they;'re cracked up to be. According to the story, the FTC "is looking into allegations that Amazon misleads customers about its pricing discounts ... The probe is based on a complaint from the advocacy group Consumer Watchdog," which charges that Amazon "often employs 'previous' prices, which it alleges are designed to give the appearance of big discounts. Consumer Watchdog said the 'previous' prices appear to replace Amazon's 'list price,' which earlier this year came under fire for allegedly failing to reflect the actual market price of an item."
KC's View:
It is not for nothing that Amazon, according to Reuters, spent $3.2 million on its DC lobbying efforts in just the second quarter of this year.

I've been thinking about this a lot over the past few days. In other situations, I've actually suggested that federal regulators need to adjust the way they think about competition, and not apply 20th century rules to 21st century constructs. By that logic, maybe they do need to give the Amazon-Whole Foods deal a harder look than a simple market share calculation would suggest.

That said, I've also generally taken the position that traditional retailers should not be protected from competition by the government. it is absolutely true that Amazon is a major, disruptive competitor with enormous reach and buying power - I think it is even fair to say that Amazon's penetration into the American consciousness actually outweighs its sales and profits. But Amazon should not be prevented from taking the next step in its evolution because other retailers are concerned about the competition.

Make no mistake, this is at least part of the calculation. It is no coincidence that one of Rep. Cillicine's constituents is CVS - a retailer that has to be concerned about any possible expansion by Amazon into the prescription/pharmacy business.

I was interested the other day to read a piece in the New York Times about economist Michael Mandel, who disagrees with many of his brethren in arguing that "the move toward e-commerce is creating more jobs than are being lost in the brick-and-mortar retailing industry — and that these new jobs are paying much higher wages than traditional retail jobs." Mandel, the Times wrote, "contends that most economists are using the wrong job numbers to measure the e-commerce industry. He says that government numbers and conventional industry classifications don’t properly count all the jobs associated with e-commerce — in particular, the numbers miss large parts of the industry like fulfillment centers and distribution warehouses. As anyone who has noticed the growing volume of big brown boxes being delivered to people’s homes can imagine, facilities like that, which are tied to the e-commerce sector, are expanding rapidly."

So maybe we don't have to worry about jobs after all. Just the jobs represented by the UFCW. (Public policy has to go beyond worrying about just one segment of the job market, I think. It seems to me that there are bigger fish to fry.)

I'm not done thinking about this, and I don't think that federal regulators should be done thinking about it either.

I don't think their decision should be knee-jerk one way or the other. And I don't think politics should enter the decision. (This last part worries me. President Trump keeps equating the Washington Post with Amazon, and over the weekend even sent out a Tweet referring to them as the "Amazon Washington Post." I can understand why he doesn't like the Post, but that shouldn't be part of the regulatory process.)

I do believe that we have to view the nature of competition through a different prism than in the past, but I continue to believe that Amazon's ability to innovate within its sphere of influence does not prevent other retailers from being disruptive in their own way. But it is up to them to do so, not turn to the feds for protection.