When Amazon announced last week that it intended to acquire the upscale grocery chain Whole Foods, it sent shockwaves through the grocery industry. Other grocers’ share prices plummeted. Analysts predicted Amazon would become a “top five” grocer within a few years. Synergies were imagined.
Within all the business chatter, however, a few policy wonks and at least one ally in Congress began to raise the antitrust alarm. They think Amazon is too powerful and might engage in anti-competitive practices.
On its face, and judged on the scale of recent jurisprudence, it’s not the most obvious antitrust situation. Amazon has a tiny slice of the grocery market. Whole Foods, large though it may loom in affluent cities, only has 1.2 percent market share. And while Amazon has a dominant position in e-commerce, e-commerce sales remain less than 10 percent of total retail receipts.
But freshman Congressman Ro Khanna, who represents the South Bay, including a big chunk of Silicon Valley, said that the Amazon-Whole Foods deal shows why the government should think differently about mergers. “This as a case study for how we think about antitrust policy,” he said. “It’s the particulars here.”
Khanna said that recent antitrust cases have turned on the question of whether a merger would, in point of fact, immediately raise prices for consumers. Drawing on the work of Matt Stoller and Lina Khan at the New America Foundation, he traced that very narrow test to Robert Bork’s The Antitrust Paradox, which was a move away from decades of more expansive thinking about industry concentration.