The top Democrat on the U.S. House of Representatives’ antitrust subcommittee has voiced concerns about Amazon.com Inc.’s $13.7 billion plan to buy Whole Foods Market Inc and is pushing for a hearing to look into the deal’s potential impact on consumers.
The deal announced in June marks the biggest acquisition for the world’s largest online retailer. Amazon has not said what it will do with Whole Foods’ stores and other assets, but analysts and investors worry the move could upend the landscape for grocers, food delivery services and meal-kit companies.
U.S. Representative David Cicilline requested the hearing on Thursday in a letter to the chair of the House Judiciary Committee and the subcommittee chairman. Shares of Amazon were up 0.3 percent in mid-morning trading on Friday.
“Amazon’s proposed purchase of Whole Foods could impact neighborhood grocery stores and hardworking consumers across America,” Cicilline said in a statement. “Congress has a responsibility to fully scrutinize this merger before it goes ahead.”
The deal must be approved by U.S. antitrust enforcers, in this case most likely the Federal Trade Commission. Congress plays no formal role in that process but hearings are often used to highlight the possible impact of deals on consumers. The hearing is unlikely to happen without Republican support.
Amazon and Whole Foods declined to comment.
Also this week, hedge fund manager Douglas Kass from Seabreeze Partners Management Inc. said he was shorting shares of the retailer because of concern about Amazon in Washington.
Kass said he had heard rumblings on Capitol Hill regarding concern about Amazon’s size and clout but did not specify what the concerns were.
“I am shorting Amazon today because I have learned that there are currently early discussions and due diligence being considered in the legislative chambers in Washington, D.C.,” he wrote in a note to investors late on Wednesday. “If I am correct, word of this could lower Amazon’s shares by 10 percent overnight.”
Kass said in emailed comments to Reuters on Friday that he has what he called a “core” short position in Amazon, meaning a sizeable bet based on a long-term outlook.
“This has the potential of being the biggest business news story of [the] year,” he said. Kass declined to comment when asked for more details about pressure from Capitol Hill.
Kass is followed for his bets on declines in companies’ share prices. He shorted Marvel Entertainment in 1992 when its shares were in the high $60s, and the company went bankrupt 1-1/2 years later.
He also bet against big U.S. banks leading into the 2007-2009 financial crisis, shorting Bank of America, MGIC, Citigroup and several other financials that ultimately averaged a 98 percent price decline by the time they bottomed in 2009.
While antitrust experts have said they expect Amazon’s bid to win regulatory approval, some critics argue the deal should be blocked because it gives the retailer a big head start towards domination of online grocery delivery.
They argue the Whole Foods acquisition will give Amazon an unfair advantage over traditional grocers and new players that might emerge in the market, potentially grounds for the deal to be blocked for antitrust reasons.