WSJ Information Unique | Amazon’s Deliberate Buy of MGM Faces FTC Scrutiny

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WSJ Information Unique | Amazon’s Deliberate Buy of MGM Faces FTC Scrutiny


WASHINGTON—The Federal Commerce Fee would be the company to evaluation

Amazon.

AMZN 1.49%

com Inc.’s proposed acquisition of Hollywood studio MGM, in response to individuals acquainted with the matter, simply because the fee will get a brand new chairwoman who has been important of the net large’s growth.

Amazon final month introduced its deal for MGM, which might enhance its Prime Video streaming platform in a market that features rivals corresponding to

Netflix Inc.

and

Walt Disney Co.

MGM has a library of greater than 4,000 movies, together with the James Bond franchise, and a tv catalog that features “The Handmaid’s Story” and “Vikings.”

Firms doing sizable mergers must submit their offers for presidency antitrust evaluation. The FTC shares antitrust authority with the Justice Division, and the 2 businesses break up up the work of reviewing proposed offers. The division has just lately reviewed transactions involving video content material, together with Disney’s acquisition of twenty first Century Fox and

AT&T Inc.’s

acquisition of Time Warner, a deal the division unsuccessfully tried to dam in courtroom.

Throughout latest interagency negotiations, the FTC secured the appropriate to evaluation the Amazon-MGM deal, the individuals acquainted with the matter stated. The FTC pushed for jurisdiction over the merger evaluation as a result of it already has an open, wide-ranging antitrust investigation into Amazon’s enterprise practices, the individuals stated.

The FTC and the Justice Division beforehand agreed to divide up investigations of 4 main tech giants’ conduct, with the division taking

Apple Inc.

and

Alphabet Inc.’s

Google, whereas the FTC took

Fb Inc.

and Amazon.

An Amazon spokesman had no speedy remark. An FTC spokeswoman declined to remark.

MGM’s library of greater than 4,000 movies is anticipated to spice up Amazon’s Prime Video streaming platform.

Photograph:

Eric Thayer/Bloomberg Information

The MGM evaluation might current an early check for brand spanking new FTC Chairwoman

Lina Khan,

who made her identify in antitrust circles largely by criticizing Amazon. She wrote a extensively learn law-review article whereas at Yale Regulation College that argued U.S. antitrust legislation has did not restrain the net retailer.

Ms. Khan extra broadly has argued that antitrust enforcement wants far-reaching modifications to higher restrain dominant corporations. She received Senate affirmation final week to be an FTC commissioner, and President

Biden

then instantly designated her as chairwoman.

Amazon is a rising producer of its personal video content material and has grow to be an aggressive purchaser of sports activities rights, together with these for the Nationwide Soccer League. Nevertheless it nonetheless has a comparatively modest library in contrast with conventional media giants.

MGM is now one of many smaller studios in Hollywood, that means the tie-up isn’t essentially the form of transaction that previously would have raised speedy crimson flags about anticompetitive focus. However in mild of Amazon’s broader market footprint, the addition of MGM might increase considerations in regards to the growth of the net large’s platform, which critics in Washington already imagine is just too highly effective.

Although the FTC and Justice Division have related antitrust authority, their procedures are totally different, and firms typically want to have their issues earlier than the division as a result of its course of is extra simple.

If the Justice Division needs to dam a merger, it should go to courtroom and win a case. The FTC, in contrast, has the choice to problem a transaction in its personal administrative-court proceedings, and might go to federal courtroom concurrently to hunt a preliminary injunction blocking a merger whereas its in-house authorized proceedings happen. That two-track course of might be extra difficult, and firms face excessive hurdles to successful a case run by the FTC’s administrative system.

The FTC in 2017 cleared Amazon’s acquisition of Complete Meals Market with out giving the deal a prolonged, detailed evaluation. Ms. Khan was amongst a bunch of progressives who criticized the transaction and argued that the FTC ought to block it.

—Joe Flint contributed to this text.

Write to Brent Kendall at [email protected]

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