Want a glimpse into the regulatory mindset of government?
This earlier post passed along Don Boudreaux’s response to the Wall Street Journal letter-to-th editor of Arnie Celnicker, a former attorney for the FTC and the Antitrust Division of the Justice Department, in which Celnicker defends the FTC’s opposition to the proposed Whole Foods-Wild Oats merger (previous posts here). In an attempt to have the last word, Celnicker has written another letter-to-the editor in which he contends, in part, as follows:

We agree that consumers want more organic products, and that there has been increased investment to meet that demand. The financial markets, however, have deprived Wild Oats of the capital to compete head-on with Whole Foods. Mr. Boudreaux’s assertion that this indicates Wild Oats’ assets are now poorly managed, and that they would be better managed by Whole Foods, is a non sequitur.
Avoiding head-on competition with Whole Foods indicates that Whole Foods already has such market power that the risks of head-on competition are great, for Wild Oats or any other firm. It does not mean Wild Oats is poorly managed; it does show the capital market’s respect for a firm, Whole Foods, with a dominant market position. Even if Wild Oats were poorly managed, it does not follow that an acquisition by Whole Foods would enhance consumer well-being. These two firms are the only two national premium natural and organic supermarkets. Surely there are others, besides Whole Foods, who can efficiently manage Wild Oats’ assets, without reducing competition.

Celnicker suggests that capital markets “have deprived” Wild Oats as if the company has some entitlement to capital, and that such deprivation justifies government intervention. But if there are others who can efficiently manage Wild Oats’ assets, then why did they not outbid Whole Foods for those assets?
The Wild Oats board has determined that the best value for the company’s shareholders can be derived by selling to Whole Foods. Celnicker contends that the government’s judgment regarding “consumer well-being” should trump the Wild Oats board’s judgment on behalf of Wild Oats’ shareholders. But will the government provide a safety net for the loss in value to Wild Oats’ shareholders if the Wild Oats board’s judgment is correct and those assets decline in value without the merger? If the government is not willing to step up and arrange alternative capital, then the value of that “consumer well-being” that Celnicker seeks to have the government protect is largely ephemeral in nature.