Top Democrat Calls For Hearing Over Amazon, Whole Foods Deal

Congressman’s Amazon letter echoes New Deal thinking

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. Cicilline, the top Democrat on the House Judiciary Antitrust Subcommittee, is concerned that the deal will cause decreased competition, and as a result, costs could rise while wages fall.

Cicilline stressed that the merger "raises important questions concerning competition policy, such as how the transaction will affect the future of retail grocery stores, whether platform dominance impedes innovation, and if the antitrust laws are working effectively to ensure economic opportunity, choice, and low prices for American families". "Congress has a responsibility to fully scrutinize this merger before it goes ahead".

The deal must be approved by USA antitrust enforcers, in this case most likely the Federal Trade Commission. Amazon remained flat in late Friday trading at $1,001 a share.

While Congress plays no formal role in the process of approving the deal, hearings are often used to highlight the possible impact of deals on consumers. The hearing is unlikely to happen without Republican support.

Also on Thursday, Kass, owner of Seabreeze Partners Management Inc., announced in a blog post that he was shorting Amazon due to risks of antitrust issues.

'I am shorting Amazon today because I have learned that there are now 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.

In that letter, Kass said he had heard early talks in D.C. regarding Amazon and antitrust regulations.

'If I am correct, word of this could lower Amazon's shares by 10 percent overnight'.

'This has the potential of being the biggest business news story of year, ' he said.

Kass is followed for his bets on declines in companies' share prices.

He also bet against big USA 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.

Cicilline acknowledged that most experts have voiced doubt that the deal would violate anti-trust rules.

Cicilline added that news of the deal was already impacting the market and that other grocery retail chains would suffer from the acquisition.

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