In the wake of their embarrassing electoral defeat in November, Congressional Democrats are turning against the wealthy tech benefactors who bankroll their campaigns. To wit, a group of 12 Democratic Congressman have signed a letter urging the Department of Justice and the Federal Trade Commission to conduct a more in-depth review of e-commerce giant Amazon.com Inc.'s plan to buy grocer Whole Foods Market Inc., according to Reuters.
Rumblings that Amazon is engaging in monopolistic business practices resurfaced last week when the top Democrat on the House antitrust subcommittee, David Civilline, voiced concerns about Amazon's $13.7 billion plan to buy Whole Foods Market and urged the House Judiciary Committee to hold a hearing to examine the deal's potential impact on consumers.
Making matters worse for the retailer, Reuters reported earlier this week that the FTC is investigating the company for allegedly misleading customers about its pricing discounts, citing a source close to the probe.
The letter is at least third troubling sign that lawmakers are turning against Amazon, even as President Donald Trump has promised to roll back regulations, presumably making it easier for megamergers like the AMZN-WFM tieup to proceed.
So far, it’s mostly Democrats who are urging the FTC to take “a closer look” at the deal. However, some suspect that Amazon founder Jeff Bezo’s ownership of the Washington Post – a media outlet that has published dozens of embarrassing stories insinuating that Trump and his compatriots colluded with Russia to help defeat Democrat Hillary Clinton – could hurt the company’s chances of successfully completing the merger, as its owner has earned the enmity of president Trump. Similar concerns have dogged CNN-owner Time Warner’s pending merger with telecoms giant AT&T.
In the letter, the group of Democratic lawmakers – which includes rumored presidential hopeful Cory Booker, the junior senator from New Jersey – worried that the merger could negatively impact low-income communities. By putting other grocers out of business, the Amazon-backed WFM could worsen the problem of “food deserts,” areas where residents may have limited access to fresh groceries.
"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," the letter said on Thursday.
In the hopes of changing Whole Foods’ “whole paycheck” image, Amazon has lobbied Congress to be able to accept food stamps online, and is participating in a pilot program to “expand access” to fresh food in impoverished communities. You can read the letter in full below:
Brian Huseman, Amazon's vice president of policy, in a letter to Fudge, tried to placate the angry Democrats by assuring them that Amazon intends to address their concerns.
"'We agree with you that access to food is an important issue for the country, and we share your goal of improving that access,' Huseman said in the letter.
'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,' Huseman wrote to Fudge.
Huseman also disputed claims that Amazon is anti-competitive, pointing out that Wal-Mart has a larger market share, and added that the company doesn’t plan on laying off workers…despite widely touting its plans to rely on automation – including special sensors and artificial intelligence – to eliminate the need for cashiers in it brick-and-mortar grocers.
“Amazon has sought to dispute that it would monopolize the grocery industry. Wal-Mart Stores Inc currently controls the largest market share.
‘We also do not plan job reductions as part of the acquisition, which if approved would result in a company with a combined less than 3 percent of national grocery sales,’ Huseman wrote.”
The letter was released to the public by the United Food and Commercial Workers union, which praised the Democrats plans to fight back against a merger that will likely result (despite Huseman’s claims to the contrary) in a sharp reduction in its membership base.
“Political concerns about Amazon’s acquisition of Whole Foods are growing for good reason,” UFCW President Marc Perrone said on Friday. “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 and Whole Foods hope to expand access to fresh food, said Brian Huseman, Amazon's vice president of policy, in a letter to Fudge, also on Thursday.
"We agree with you that access to food is an important issue for the country, and we share your goal of improving that access," Huseman said in the letter.
So far, any negative impact on Amazon’s shares has been minimal as the broader market remains in rally mode. On Friday, the Nasdaq fell after rising for nine straight days – stopping just shy of what would’ve been its longest winning streak in years.