Geoff Manne (see also here) and Thom Lambert (see also here) over at the Truth on the Market blog are having a field day bashing the misdirected FTC opposition of the Whole Foods-Wild Oats merger. And with good reason.
The latest development in this bizarre episode of excessive governmental regulation is the publication of the unredacted version of the FTC’s complaint against the proposed merger, which relies heavily on comments that Whole Foods CEO John Mackey made to his board about the merits of the merger. Not surprisingly, Mackey told the Whole Foods board members the straight truth as to why it would be good for Whole Foods to acquire Wild Oats and, in do doing, pooh-poohed the ability of other supermarket chains to compete with Whole Foods. This David Kesmodel/WSJ($) article sums it up well:

The lawsuit quotes Mr. Mackey as saying that the company “isn’t primarily about organic foods” but “only one part of its highly successful business model,” citing as others “superior quality, superior service, superior perishable product, superior prepared foods, superior marketing, superior branding and superior store experience.”

What is wrong with that? All Mackey is saying is that other supermarkets are not currently a direct competitor of Whole Foods because they are focused on price rather than the Whole Foods shopping experience. But nothing is stopping those other chains from changing course and imitating the Whole Foods karma if it’s in the interest of their shareholders to do so. The FTC’s theory that Whole Foods is attempting to monopolize the “hip” grocery shopping experience borders on the absurd.
Mackey has fired back with his own blog post, which is well worth reading. Among other things, he points out that Whole Foods’ prices are unaffected by whether it is competing in a particular area with a Wild Oats store and that several other grocery chains are bigger and more direct competitors to Whole Foods than Wild Oats. Frankly, Mackey’s blog post would be an excellent affidavit in support of a summary judgment motion for Whole Foods and Wild Oats.
Wouldn’t it be interesting if Whole Foods could, through discovery, find out why the FTC is pursing this costly regulatory charade in the first place?