Amazon’s Deliberate Buy of MGM Faces FTC Scrutiny

Firms doing sizable mergers need to submit their offers for presidency antitrust overview. The FTC shares antitrust authority with the Justice Division, and the 2 companies 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 21st Century Fox and AT&T Inc.’s acquisition of Time Warner, a deal the division unsuccessfully tried to dam in courtroom.

Throughout current interagency negotiations, the FTC secured the fitting to overview the Amazon-MGM deal, the folks acquainted with the matter stated. The FTC pushed for jurisdiction over the merger overview as a result of it already has an open, wide-ranging antitrust investigation into Amazon’s enterprise practices, the folks 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 rapid remark. An FTC spokeswoman declined to remark.

The MGM overview 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 regulation has did not restrain the web retailer.

Ms. Khan extra broadly has argued that antitrust enforcement wants far-reaching modifications to raised restrain dominant corporations. She gained 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 turn out to be an aggressive purchaser of sports activities rights, together with these for the Nationwide Soccer League. However it nonetheless has a comparatively modest library in contrast with conventional media giants.

MGM is now one of many smaller studios in Hollywood, which means the tie-up isn’t essentially the form of transaction that previously would have raised rapid purple flags about anticompetitive focus. However in gentle of Amazon’s broader market footprint, the addition of MGM might elevate issues in regards to the enlargement of the web large’s platform, which critics in Washington already imagine is simply too highly effective.

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

If the Justice Division desires 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 may be extra sophisticated, and firms face excessive hurdles to profitable a case run by means of 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 overview. Ms. Khan was amongst a gaggle 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 brent.kendall@wsj.com