Teamsters, WGA & Different Unions Push FTC to Contest Amazon-MGM Performed Deal – Deadline
The Writers Guild of America West and a coalition of unions launched another salvo against Amazon-MGM, urging antitrust watchdog, the Federal Trade Commission, to contest the deal even though it officially closed last week.
Their letter to the FTC today focused in part on Amazon’s acquiring MGM-owned Epix, taking out a producer and nascent streaming service, and it hit on previous arguments that the FTC must prevent Amazon from “consolidating power across the entertainment industry, reducing consumer choice and harming the creative workforce.”
“We strongly believe that this is an instance where the FTC must challenge a post-merger deal, because of the outsized role Amazon plays in our overall economy and how the merger would enhance Amazon’s ability to leverage its power against workers in the entertainment industry and across different platforms,” the groups said.
Under the banner of the Strategic Organizing Center, the other labor unions — representing over 4 million workers — include Service Employees International, International Brotherhood of Teamsters, Communications Workers of America and United Farmworkers of America.
The FTC doesn’t formally ‘approve’ deals. Rather, a time-clock for review starts when one is announced and can run out with the FTC either taking no action, or suing to block it – which requires a majority vote of commissioners. There are only four in place currently, reportedly split 2-2 along party lines on Amazon-MGM. The fifth commissioner awaits Senate approval.
FTC Chair Lina Khan, an aggressive antitrust enforcer, has written papers about risks posted by Amazon’s dominance and was asked by the company to recuse herself from a review but declined.
The merger closed March 17 — last Thursday. Asked for comment, the tight-lipped FTC noted that it can challenge a deal at any time.
“The FTC does not comment on any particular matters. However, we reiterate that the Commission does not approve transactions and may challenge a deal at any time if it determines that it violates the law,” a spokesperson said.
“Additionally, this summer the FTC announced that it will send pre-consummation warning letters in connection with deals it cannot fully investigate within the timelines established by the HSR Act. These letters alert merging parties that their transactions remain under investigation, and warn that consumption occurs at their own risk.” (The HSR, or Hart-Scott-Rodino, Act requires parties to proposed deals to submit premerger notification to the FTC and DOJ.)
Amazon declined to comment on the letter from WGAW et al, or on whether it had received a “pre-consummation” warning.
The FTC has sued to block completed deals a few times: In 2020, it voted 5-0 to sue to unwind Altria’s $12.3 billion investment in rival JUUL Labs. It sued Facebook the same year, alleging the social media giant had maintained a monopoly through a long course of anticompetitive conduct its 2012 acquisition of up-and-coming rival Instagram and its 2014 acquisition of mobile messaging app WhatsApp.
In Altria/JUUL, the case went to administrative court where a judge ruled to dismiss the complaint. The FTC staff filed an appeal. For Facebook, the case went to federal court where it had a rocky reception at first but litigation is ongoing.
Pundits generally have been skeptical there was much of an antitrust runway in the Amazon-MGM combination given competition in the streaming space and the fact that MGM, while a substantial studio, is no giant. Regulators allowed Comcast to buy NBCUniversal, Disney to buy Fox, and Discovery to merge with WarnerMedia, among others.
“The history of bad mergers that have been approved in media just shows the urgency to step up antitrust enforcement,” Laura Blum-Smith, WGAW Director of Research and Public Policy, told Deadline.
“Streaming has become very vertically integrated, with all of the major players focused on producing content for their own streaming services. That means less competition between employers of writers and others in the industry, higher barriers of entry for new entrants, and an industry pushed in a direction where more consolidation is very likely, where there could be just 3 or 4 streaming companies in a few years ,” she said,
“That would be a terrible outcome for diversity of content, and this merger moves us further in that direction in multiple ways. It eliminates MGM’s Epix network, which is a competing buyer, increases vertical integration and it will prompt reactive consolidation as other companies rush to bulk up in response.”
WGAW was distressed by the Disney-Fox merger. In Dec of 2017 it issued the following statement: “In the relentless drive to eliminate competition, big business has an insatiable appetite for consolidation. Disney and Fox have spent decades profiting from the oligopolistic control that the six major media conglomerates have exercised over the entertainment industry, often at the expense of the creators who power their television and film operations. Now, this proposed merger of direct competitors will make matters even worse by substantially increasing the market power of a combined Disney-Fox corporation. The antitrust concerns raised by this deal are obvious and significant. The Writers Guild of America West strongly opposes this merger and will work to ensure our nation’s antitrust laws are enforced.”
Last December, the guild published a report called Broken Promises: Media Mega-Mergers and the Case for Antitrust Reform. It called media “the poster child for the failures of antitrust enforcement” and said a wave of deals over the past 12 years have led to “lower wages, higher consumer prices, fewer or worse consumer choices, and less innovation.”
On Amazon-MGM, SOC sent a pair of letters to the FTC last year outlining the dangers that Amazon’s “aggressive anti-competitive conduct in the streaming industry poses across the distribution chain.” WGAW had highlighted “threats to the creative workforce posed by an increasingly vertically and horizontally integrated entertainment industry.”
Today’s missive was sent to Holly Vedova, director of the FTC’s Competition Bureau, by Blum-Smith and Michael Zucker, SOC Executive Director. It slammed what it called “Amazon’s distorted, retail-driven goals.” The giant company has been upfront about using Prime Video as a gateway into its Amazon Prime customer loyalty program, the biggest in the world and the beating heart of the company.
The letter also noted “the latest criminal referral by the House Judiciary Committee to the Department of Justice stemming from Amazon’s allegedly false testimony before Congress.” Earlier this month, a bipartisan group of lawmakers asked the DOJ to open an investigation into Amazon and its executives for potentially criminal obstruction of Congress. It’s not about media, but they alleged the company “engaged in a pattern and practice of misleading conduct” in responding to lawmakers’ e-commerce related questions about its private-label practices and its collection of third-party seller data.
Comments are closed.