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    Twelve lawmakers call for review of Amazon’s Whole Foods acquisition

    July 21, 2017

July 21, 2017

Twelve lawmakers call for review of Amazon’s Whole Foods acquisition

 

If you’ve been following retail news over the past month, you know the industry has been buzzing with concerns about Amazon’s acquisition of Whole Foods since their announcement in June. Now a dozen members of congress are calling on the Federal Trade Commission (FTC) and Department of Justice (DOJ) to review Amazon’s acquisition of Whole Foods in a letter sent on July 20th:

Dear Attorney General Sessions and Chairwoman Ohlhausen:

We are writing to express our concerns regarding the proposed merger between Whole Foods and Amazon. 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.

This merger should be scrutinized beyond the normal antitrust review process that only examines the competitive impact. It should also include a careful review of the impact further consolidation will have on the communities representing many of the “food deserts” across the nation. As you know, the USDA defines Food Deserts as “parts of the country void of fresh fruit, vegetables, and other healthy whole foods, and usually found in impoverished areas.” Many of these areas are populations we represent. Therefore, we hope you consider whether this merger will contribute to increasing rather than reducing the number of food deserts, and potentially increasing health disparities for African-Americans and the poor.

Good nutrition is critical for good health, and the purpose of the Supplemental Nutrition Assistance Program (SNAP) is to “provide nutrition for those who

can’t afford it.” Increasing retail food availability is a key element in changing the social conditions of low-income Americans. We are concerned that the proposed merger potentially may exacerbate the food divide among vulnerable populations, including the 41 million SNAP recipients, particularly those in low-income and rural communities.

SNAP recipients currently are unable to use their benefits to buy groceries online, but they may be able to do so in the not-too-distant future. The Department of Agriculture is preparing to roll out ten pilots that will allow some SNAP customers to use their electronic benefit transfer, or EBT cards, with online retailers – a trial called for in the 2014 farm bill. In January, Amazon was selected as one of the companies to conduct a pilot across three states: New York, New Jersey, and Maryland. Amazon’s current grocery delivery service, Fresh, requires a monthly fee of $14.99 and is only available to Amazon Prime members.

Another concern is the declining presence of retail stores due to the growth of online shopping. Amazon wields considerable power in online retailing with its platform capturing nearly 45% of all online spending. In the past few months, several major retailers have announced the closure of hundreds of stores nationwide. Many of the communities we represent may feel the impact of these announced closures.

While Whole Foods may have a limited presence in many of our districts, further consolidation may force grocers may who have a strong brick-and-mortar presence in our communities to respond to this merger. As a result, it is possible these grocers will consolidate further and close stores that offer any, or the only, option to low-income communities.

We look forward to the opportunity to work with you to address these concerns and others as your agency evaluates the benefits and challenges a Whole Foods/Amazon national footprint could bring to the food retailing industry and communities across the nation.

Sincerely,
Marcia L. Fudge
Member of Congress

Additional Signatures on File: Rep. Donald Payne (NJ); Rep. Maxine Waters (CA); Rep. Bonnie Watson Coleman (NJ); Rep. Gregory Meeks (NY); Rep. Bennie G. Thompson (MS); Sen. Corey Booker (NJ); Rep. Frederica Wilson (FL); Rep. Val Demings (FL); Del. Eleanor Holmes Norton (DC); Rep. Emmanuel Cleaver II (MO); and, Rep. Barbara Lee (CA).

Click here to view the PDF and text of the letter signed by 12 members of Congress asking the Federal Trade Commission (FTC) and Department of Justice (DOJ) to review Amazon’s acquisition of Whole Foods.

 

The letter echoed concerns voiced three days earlier by UFCW International President Marc Perrone, who also called on the FTC to review the acquisition:

Dear Commissioners:

Because of the impact of online shopping, technology, and automation, our economy and the retail grocery landscape is changing dramatically. As such, the very definition of how mergers, such as the proposed Amazon and Whole Foods merger, would impact grocery competition, customer choice, the price of goods, and, especially hard-working retail workers must be rethought. While traditional analysis may discount the threats that would arise from Amazon’s acquisition of Whole Foods, Amazon is not a traditional retailer or grocer.

By any and every reasonable measure, Amazon is an online retail monopoly. The scope and weight of Amazon’s digital reach poses a severe and constant economic threat to consumers, retailers, and especially grocers, irrespective of whether they’re located online or are traditional brick-and-mortar stores. More significantly, the scope of Amazon’s reach and the very nature of our economy today, does not limit their impact to the digital retail landscape. The fact is that Amazon is more than a digital retail monopoly; rather, it is a retail monopoly that threatens every corner of our nation’s economy.

We urge you to consider, for example, the facts of Amazon’s growing unfair scope and reach:

According to a 2016 report from the Institute for Local Self-Reliance, half of all online shopping searches start directly on Amazon.

That same report states that within five years, 20 percent of the U.S.’s $3.6 trillion retail market will have shifted online, and Amazon is on track to capture two-thirds of that share.

Additionally, a report from Consumer Intelligence Research Partners last week estimated total U.S. Prime membership at 85 million, which is up 35 percent from the year-ago quarter and double from two years ago. CIRP also noted that 63 percent of U.S.-based Amazon customers are Prime members.

In terms of impact, Amazon arguably poses a greater threat to our retail economy than any other online or traditional brick and mortar grocer. Again, we urge each commissioner to consider the following impacts:

  • Hurts Consumers: Amazon’s proposed merger of Whole Foods will hurt consumers by allowing their national economic power to gain unfair advantage with suppliers. As a result, not only may consumer prices increase, the quality and scope of products may be impacted. While Whole Foods may have 460 stores worldwide, the reality is that the very nature of Amazon’s size allows them to unfairly compete against small and medium-sized grocers when it comes to the purchase of goods.
  • Hurts Choice: Amazon’s reach will ultimately reduce the number of grocery competitors that consumers can choose from. Regardless of whether Amazon has an actual Whole Foods grocery store near a competitor, their online model and size allows them to unfairly compete with every single grocery store in the nation.
  • Hurts Hard-Working Men and Women: The FTC is a public agency, and it must consider the impact that any merger will have on consumers and workers. Amazon’s online business model is built on a brutal foundation of automation to cut costs. If this merger proceeds, it could impact thousands of Whole Foods workers’ jobs simply for the sake of enriching one of the nation’s wealthiest individuals – Jeff Bezos.
  • Job Destroying Automation: Amazon has made its competitive vision clear with the introduction of its Amazon Go format, which eliminates nearly every grocery worker in its stores, and replaces them with automation and automated check stands.  Amazon’s acquisition of Whole Foods is not about improving customer service, products or choice. It is about destroying Whole Foods jobs through Amazon-style automation. 

We strongly urge the FTC to carefully review this merger. We believe a fair and impartial analysis will prove that Amazon’s acquisition of Whole Foods is a competitive threat to our economy that will hurt workers and communities.

Sincerely,

Marc Perrone