Sen. Warren Urges Scrutiny of Dick's-Foot Locker Merger Over Antitrust Concerns

In a recent move, Senator Elizabeth Warren has called upon the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to halt the planned acquisition of Foot Locker by Dick's Sporting Goods. She voiced her concerns in a letter, highlighting potential job losses, price hikes, and a diminished competitive landscape.

Sent on a Tuesday evening, Warren's letter urges the agencies to examine the deal carefully and to veto it if it breaches competition laws. According to a document procured by CNBC, Warren fears the merger will result in a market dominated by just two major footwear chains: the combined entity and JD Sports.

Highlighting economic pressures, Warren cited a survey from Credit Karma noting that more than 50% of parents expect to cut back on basics like groceries due to rising costs linked to school shopping. Elevated prices for sports shoes, she argued, could exacerbate these challenges for families.

The senator pointed out that the athletic shoe market is rapidly consolidating. Britain's JD Sports, targeting the U.S. for expansion since 2018, has aggressively acquired smaller competitors, including Finish Line, Shoe Palace, DTLR, and Hibbett.

If Dick's acquisition goes through, what remains of the market would largely be owned by JD Sports and the newly formed company, potentially harming smaller stores across America, Warren cautioned.

Warren emphasized, "Currently, Dick's and Foot Locker vie with one another and independent stores to secure supplier agreements. A merger would dramatically bolster their leverage over manufacturers, possibly disadvantaging smaller retail players."

She further warned that this power could drive the merged firm to engage in practices that block suppliers from associating with independent sellers, leading to anticompetitive behaviors.

The Biden administration's FTC has taken an assertive stance on mergers, although past expectations varied with the hope that larger deals might find favor.

Among the few approved, some had been previously halted, yet it's uncertain how the new officials at the FTC and DOJ will handle retail merger reviews that impact consumers directly.

Amanda Lewis, an antitrust authority formerly of the FTC and now a partner at Cuneo Gilbert and LaDuca, remarked to CNBC that the merger is expected to go ahead, given it represents only 15% of the sporting goods market—a figure traditionally below the 30% threshold that triggers regulatory unease.

Lewis anticipates approval but notes that Dick's may need to sell off certain outlets to maintain market fairness, though fewer divestitures might be needed now compared to prior administrations.

At this moment, both the DOJ and FTC have not issued any statements regarding their stance on this issue.