We previously wrote about the proposed merger between daily fantasy sports competitors DraftKings and FanDuel. As we noted before, the companies together own about 90 percent of the market for daily fantasy sports, making their merger particularly concerning from an antitrust standpoint.
Roughly a month after the Federal Trade Commission sued to block the proposed merger based on concerns about competition, the two companies announced that the proposal was off the table, and that they would be moving forward separately. It isn’t clear to what extent the suit influenced the companies’ decision to call off the deal, but it’s possible that they simply didn’t want to spend the money it would take to defend the merger against the opposition of the Federal Trade Commission.
As we’ve pointed out, mergers between direct competitors generally raise the greatest concerns for federal regulators since they can result in higher prices for consumers, lower quality products and services, less innovation, and other competition-related problems. It isn’t that these proposals are doomed to failure, but that it is often necessary for the companies to adjust the terms of the merger to address concerns raised by regulators.
Another recently proposed merger that could raise competitive concerns, though for slightly different reasons, is Amazon’s proposed acquisition of Whole Foods Market. The proposal was announced last month. Amazon, of course, is the world’s largest online retailer, while Whole Foods Market operates a very different type of business. One of the concerns with the merger, though, is that it could have a negative impact on neighborhood grocery stores, food delivery services, and meal-kit companies.
Competitive concerns aside, it isn’t clear yet whether the merger of Amazon and Whole Foods will be a success endeavor. Mergers can be tricky to successfully see through. Careful planning and sound guidance is necessary. We’ll say more about this in our next post.
Nbclosangeles.com, “DraftKings, FanDuel Call Off Daily Fantasy Sports Merger,” Phillip Marcelo, June 19, 2017.
Reuters, “U.S. lawmaker calls for hearing on Amazon Whole Foods deal,” Diane Bartz & Jennifer Ablan, July 14, 2017.