In a move that likely won’t make President Donald Trump happy, the Federal Trade Commission (FTC) has approved Amazon’s $13.4 billion acquisition of Whole Foods. The president had previously spoken out against the company and its owner, Jeff Bezos, but this decision eliminates any federal antitrust hurdles that Amazon would need to overcome.
In June, the retail giant agreed to acquire the upscale grocery chain, known for its $5.99 asparagus water and blueberry pancake-flavored pork sausages. The merger accomplishes two objectives: help Amazon become a major player in the food and beverage market, and gain some footing against its biggest American challenger, Wal-Mart.
Bruce Hoffman, acting director of the FTC’s Bureau of Competition, said in a statement:
The FTC conducted an investigation of this proposed acquisition to determine whether it substantially lessened competition under Section 7 of the Clayton Act, or constituted an unfair method of competition under Section 5 of the FTC Act. Based on our investigation we have decided not to pursue this matter further. Of course, the FTC always has the ability to investigate anticompetitive conduct should such action be warranted.
The Whole Foods shareholders voted in favor of going ahead with the deal. Once the agreement has been completed, John Mackey, Whole Foods co-founder, and CEO, will continue to be at the helm of the chain and all 460 stores.
Critics of the blending of the two brands questioned the website’s vast reach in the U.S. marketplace. One such decrier is Consumer Watchdog, an organization that requested the FTC to impede the merger, according to Reuters:
Apparently the only way to hold Amazon accountable for its abuse of consumers is at the state level.
Donald Trump himself has hinted throughout the summer that he might try to block the deal. The president has been a staunch opponent of Bezos, who also owns The Washington Post, a newspaper that engages in a nearly daily barrage of attacks against Trump. During his Phoenix rally on Tuesday, Trump referred to the paper as a “lobbying tool for Amazon.” Last week, he also accused the retail behemoth on Twitter of destroying localities and tax-paying small businesses:
Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!
It was a flawed tweet on several fronts. First, any “great damage” that has transpired is because Amazon offers a better product and service than other companies. Second, Amazon is creating thousands of full-time, part-time and seasonal jobs at its warehouses. Third, Amazon pays taxes.
And this isn’t the only deal he has threatened to block. On the campaign trail, the real estate billionaire mogul hinted that he would attempt to obstruct AT&T’s $85 billion purchase of Time Warner, the parent company of CNN. The Trump administration is presently reviewing the deal, but most industry observers say it will be approved.
The competition may suffer a black eye and a bruised upper lip from the Amazon-Whole Foods mix in the short-term, but Amazon’s rivals will survive and potentially thrive. And for the American consumer, that’s good news. Wal-Mart and Kroger, for example, are dramatically expanding their online shopping infrastructures. They’re also trying to fend off foreign competition, like German grocery chains Aldi and Lidl, by discounting products.
There were never any genuine antitrust risks, and this agreement may generate more competition and reduce consumer prices. In the end, the only injured party may be Trump’s ego, but the president will get over it and focus his efforts on others who may be trying to undermine his agenda.
Do you approve of Amazon buying Whole Foods? Let us know in the comments section!