Posted by The Hills
By Jonathan M. Barnett
It turns out we can learn a lot about antitrust from cheap tomatoes. When Amazon acquired Whole Foods, the antitrust agencies’ failure to block the transaction was vigorously criticized as another indication of antitrust enforcers’ having fallen asleep at the regulatory wheel.
Commentators pointed to the $13.4 billion transaction as evidence of the expanding reach of digital monopolies into every corner of the economy. The prognosis for competitive markets was so grim that some even argued (and still argue) that companies like Amazon should be broken up.
Yet, the market has disproved these doomsday predictions. So far, it appears that Amazon’s foray down the grocery aisle has done nothing but good for consumers. Whole Foods’ recent announcement of dramatic price reductions is only part of reinvigorated competition in the grocery market.
The entry of a formidable competitor has precipitated substantial discounts and prompted “old economy” incumbents to invest in “new economy” innovations, such as expanding online ordering and home delivery services.
This is exactly the type of price competition and product innovation that antitrust is designed to foster. Blocking the Whole Foods acquisition would have been classic policy overreach from the “big is bad” days of pre-Chicago antitrust.
The rush to condemn the Amazon-Whole Foods acquisition is indicative of a resurgent antitrust populism that has emerged in policy commentary and has been advocated by some politicians. These calls for dramatic intervention on antitrust grounds overlook three critical points.