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Amazon Strikes to Pressure FTC Antitrust Resolution on MGM Deal

Amazon Strikes to Pressure FTC Antitrust Resolution on MGM Deal

Amazon.com Inc.

AMZN -1.97%

has given the Federal Commerce Fee a fast-approaching deadline to ship a verdict on its proposed $6.5 billion acquisition of the MGM film and tv studio, a transfer that would make it tough for the company to problem the deal earlier than the tech big completes it.

Amazon not too long ago licensed to the FTC that it had offered all the data requested by antitrust investigators, in keeping with folks acquainted with the matter. That certification triggered a ticking clock for the FTC that expires in mid-March, the folks stated. If the fee doesn’t file a authorized problem earlier than the deadline, Amazon may very well be free to consummate the deal.

Amazon wouldn’t essentially be away from an FTC menace if the deadline expires, as a result of the fee has the flexibility to problem mergers and acquisitions after they shut. And in current months, the fee began warning some merger companions that their offers remained below investigation even after the legally mandated ready interval had expired. The fee additionally has opened a long-running investigation into the corporate’s enterprise practices.

However Amazon’s closing of the MGM deal would scale back some uncertainty for the businesses and permit Amazon to maneuver ahead with its plans. The FTC may nonetheless file go well with, at which level the end result can be decided by antitrust litigation that would drag on for months or years.

The European Union’s antitrust enforcers are also reviewing the deal and will take steps that might impression U.S. deadlines or give the FTC extra time.

The FTC’s Democratic chairwoman,

Lina Khan,

in prior roles has argued the federal government ought to do extra to restrain Amazon’s efforts to increase its empire. Amazon’s MGM acquisition, introduced final Could, has offered an early take a look at for Ms. Khan’s method. However she is working short-handed, a state of affairs that would persist past the approaching deadline.

The fee is cut up 2-2 between Democratic and Republican commissioners, and it isn’t clear when the Senate will fill an FTC emptiness with one other Democrat who would give Ms. Khan a majority to probably pursue aggressive instances.

President

Biden’s

nominee for the place,

Alvaro Bedoya,

has been mired in a partisan battle over his affirmation, and there’s no scheduled time-frame for the total Senate to vote on him.

Whereas FTC Democrats and Republicans have voted collectively to carry some merger lawsuits, the 2 GOP commissioners have made clear they’re extra skeptical of boundary-pushing instances favored by progressives, significantly when corporations are combining vertically as an alternative of competing head-to-head.

If the deal have been to shut, it might be the second-largest in Amazon’s historical past after its $13.7 billion acquisition of grocery chain Complete Meals in 2017.

The MGM deal got here as Amazon was going through growing antitrust scrutiny within the U.S. and Europe about its dimension and energy. Amazon has a $1.6 trillion market worth and holds a high market share place in most of the industries by which it operates, together with e-commerce and cloud computing.

Whereas MGM is the smallest of the most important Hollywood studios by way of manufacturing and income, its huge library of films and tv exhibits can be an enormous enhance for Amazon’s Prime Video streaming platform. Among the many greater than 4,000 movies MGM owns are the James Bond and Rocky franchises.

Though Amazon dominates many industries together with ebooks and sensible audio system, it’s nonetheless taking part in catch-up in streaming. Rivals akin to

Netflix Inc.

and

Walt Disney Co.

’s Disney+ produce extra content material and have greater international manufacturers. Given Amazon’s deep pockets and willingness to spend closely—it paid excess of most Hollywood insiders thought MGM was price—they aren’t taken frivolously by their opponents.

Apple Inc.

and

Sony Group Corp.’s

Sony Photos Leisure are among the many corporations that balked at MGM’s price ticket, folks acquainted with the matter stated.

The streaming wars may imply you will have far more choices relating to platforms and content material for leisure. However in the end, paying for all these choices goes to look loads just like the excessive costs you used to pay on your old-school cable bundle. Picture: Alexandra Cardinale

Moreover leisure content material, Amazon can be betting closely on skilled sports activities to spice up its Prime Video service. Final 12 months, it struck a deal for rights to the Nationwide Soccer League’s Thursday Evening Soccer bundle at a price ticket of $1.2 billion a season over 11 years, folks acquainted with the pact stated.

The EU stays a query mark within the merger-clearance course of.

Amazon formally notified the European Fee, the bloc’s high antitrust enforcer, in regards to the deal in February and the physique has a provisional deadline to resolve the case by March 15, although that deadline will be prolonged. In one of these preliminary assessment, the fee can both approve a deal, with or with out cures, or resolve to open an in-depth investigation into competitors issues.

If European enforcers delay their determination or wish to take a more in-depth take a look at the deal, that would delay Amazon’s capacity to shut, a transfer that might purchase the FTC extra time.

Amazon and Ms. Khan have a contentious historical past courting again to a law-review article Ms. Khan wrote when she was in Yale Legislation Faculty. Her 2017 article titled “Amazon’s Antitrust Paradox” argued that antitrust legal guidelines had did not restrain the e-commerce big. In mild of her criticism of Amazon, the Seattle-based firm filed a request final June that Ms. Khan recuse herself from antitrust issues pertaining to Amazon.

The FTC hasn’t publicly responded to that request.

Write to Joe Flint at joe.flint@wsj.com, Dana Mattioli at dana.mattioli@wsj.com and Brent Kendall at brent.kendall@wsj.com

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