FTC Clears Amazon-Whole Foods Deal

By Brent Kendall and Heather Haddon Features Dow Jones Newswires

The Federal Trade Commission on Wednesday gave the green light to Amazon.com Inc.'s planned acquisition of Whole Foods Market Inc., a move that allows the companies to complete their transaction and avoid a prolonged antitrust investigation.

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The FTC had been conducting an initial review of the deal to see if it might raise any concerns about competition. The commission had the option of examining the transaction in more depth--a move that had been called for by some Democratic lawmakers, labor and consumer groups--but the FTC instead decided that further scrutiny wasn't warranted.

"Based on our investigation we have decided not to pursue this matter further," said Bruce Hoffman, the acting director of the FTC's bureau of competition.

Amazon and Whole Foods gave the FTC additional time for a preliminary government antitrust review, a bid that proved successful in heading off a potentially longer government investigation.

The companies didn't immediately respond to requests for comment.

Earlier Wednesday, shareholders of Whole Foods approved the Amazon deal.

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The $13.7 billion deal, including debt, took the industry by surprise when it was announced June 16. The tie-up helps Amazon rapidly expand its physical presence in the more than $700 billion grocery market, while allowing it to tap Whole Foods's expertise in fresh food, supply chain and customer shopping habits.

For Whole Foods, executives viewed the merger with Amazon as welcome relief from growing demands waged by activist investors for the struggling grocer to shake up its board and operations.

A combined Amazon-Whole Foods would have only a small share of the grocery market, making the deal different from the type of mergers that raise red flags when two major competitors seek to join forces.

Whole Foods operates 469 stores and does roughly $16 billion in sales annually, compared with around 25,000 full-service supermarkets in the U.S. generating $440 billion in revenue last year.

Nevertheless, the deal has raised questions about Amazon's formidable position in online retail, and about the future of the grocery industry. Food retail stocks are down 16% this year, with only marginal gains in returns since the announcement of the deal caused stocks to plummet.

-Laura Stevens contributed to this article.

Write to Brent Kendall at brent.kendall@wsjc.om and Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

August 23, 2017 17:44 ET (21:44 GMT)