Amazon.com, Inc. AMZN isn't the biggest retailer, Wal-Mart Stores Inc WMT is. Whole Foods Market, Inc. WFM isn't the biggest grocery chain, as Kroger Co KR has approximately 10 times more stores across the United States.
So why would anyone assume Amazon's acquisition of Whole Foods would face regulatory scrutiny?
For starters, the tie-up between Amazon and Whole Foods will likely hurt local grocery stores, Rep. Ro Khanna (D-Calif.) told CNBC Monday morning. Amazon and Whole Foods have the combined power to engage in low cost pricing -- something mom and pop shops certainly can't do.
The Democratic congressman who oversees a big portion of Silicon Valley added that the merger could result in a drastic reduction in food prices to drive out competition only to be raised in the future after establishing a dominant market share. After all, investors made it clear on Friday given the strong sell-off in grocery stocks across the board that even the biggest and strongest grocers, like Kroger, could be at the mercy of Amazon's price wars.
Whole Foods is also known for paying their workers very well and this may not be the case under Amazon's rule.
At the end of the day when evaluating anti-trust issues, lawmakers focus on "economic concentration," impact on wages, and impact on small businesses, Khanna emphasized. And as it stands right now, there is reason to be concerned that all three of these factors will be impacted.
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