Federal Trade Commission Will Review Amazon’s Proposed Acquisition Of MGM (Report)

The Federal Trade Commission will review Amazon’s planned $8.45 billion deal with MGM, just as the agency has a new chairwoman who has called for reining in the power of the tech giant and other online platforms.

The Wall Street Journal reported that the FTC would review the transaction.

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The FTC and the Justice Department have authority over antitrust issues, and have traditionally split up with entity will review major transactions.

A spokesperson for the FTC said that they “do not confirm the existence of investigations, and we have no further comment on this.” An Amazon spokesperson had no comment.

While antitrust experts have raised doubts about the government’s ability to block the merger, Amazon’s announcement that it planned to buy MGM drew criticism from lawmakers on Capitol Hill and calls for regulators to closely review the deal.

Amazon’s acquisition of MGM stunned the industry when it was announced last month. The valuation was seen as surprisingly rich, though MGM’s roster of 4,000 film and TV titles, among them James Bond, Rocky and the Pink Panther, is seen as a strong foundation for streaming. In addition to Amazon Prime Video, the tech giant also operates free, ad-supported service IMDb TV, which will benefit from an influx of library programming.

The deal, which would be Amazon’s second-biggest acquisition ever after the $13.7 billion purchase of Whole Foods, comes as the company goes through a leadership change. Founder Jeff Bezos will hand the CEO reins to Andy Jassy next month, though he will remain active in the company’s affairs as executive chairman.

The Amazon-MGM transaction came just a few days after WarnerMedia and Discovery announced a $43 billion combination in a new entity following a spinoff of entertainment assets from AT&T. That deal also is about to go through regulatory scrutiny and the two companies estimate the approval could take up to a year.

In a virtual appearance last week at an investor conference hosted by Wall Street firm Credit Suisse, AT&T CFO Pascal Desroches said the company is confident in winning approval. But the timeline is unclear, he said. “We are hopeful that we are conservative in our outlook in terms of the time it is going to take to get it approved, but we don’t know.”

Amazon is facing increasing scrutiny over its business practices, which were part of a House Judiciary Committee investigation last year. The company also reportedly is the subject of an FTC and state attorneys general investigation of its treatment of third party sellers on its platform.

Last week, Lina Khan was confirmed to a vacant slot on the FTC, and President Joe Biden quickly named her the next chair of the agency. She is the author of the Yale Law Journal article Amazon’s Antitrust Paradox, in which she argued that the current emphasis on the consumer welfare standard in antitrust enforcement has made it difficult to counter the competitive harms of online platforms.

Still, far larger media mergers have gained government approval, including The Walt Disney Co.’s purchase of Fox assets. AT&T’s acquisition of Time Warner was challenged by the Justice Department, but the government lost the court battle.

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