FTC gives Whole Foods merger another long, hard look

Oh, Whole Foods.  August just isn’t your month, is it?

First, there were last week’s disappointing third quarter results and your warning to shareholders that Q4 isn’t looking so hot, either.  We don’t blame you entirely — buying Wild Oats last year was expensive, and you are still trying to find a way to trade in your arugula-peddling ways for something that will resonate with the newly budget-minded consumer.

Then, that ground beef recall. (You say you didn’t have your quality control tracking systems in place? Oopsie.)

And now this: the Federal Trade Commission hearing to review last year’s merger for a possible antitrust violation is now official.  Mark your calendar for September 8.

The FTC alleges that you broke antitrust laws by merging with Wild Oats, arguing that “premium, natural, and organic” stores (simplified in legal documents to the awkward “PNOS”) belong in their own niche of supermarketdom.  You now own the organic megastore market in the twenty or so cities where you were once lone rivals with Wild Oats — a dynamic that the FTC insists is a monopoly.  They tried to request a preliminary injuction before your merger was completed last year, but the court denied their attempts to block you.

But the FTC didn’t forget, even as you happily went through with your merger, and finally, their plea made it to the right ears — the federal appeals court has now ruled that FTC should have been granted that injuction.  So last year’s decision was overturned, and now you are back in the hot seat.  You say that all of the other major supermarkets like Kroger’s and Ralphs are your primary competitors, not just places like Wild Oats — but what will the district court say, this time around?

With the merger already almost a year old, the FTC’s proceedings are perhaps more an attempt to lay the groundwork for future cases than they are an earnest effort to topple your empire — assuming they are even able to successfully build the argument that you are monopolizing the, er, PNOS market.

If that’s the case, this may be nothing more than a nuisance.  But your stock prices are circa 2001 and falling, so it sure is a badly-timed nuisance.  And there are still two weeks left in August.

Time to sacrifice a heap of sustainably-raised salmon at the Altar of the Sherman Act and pray.  A lot.

One Response to “FTC gives Whole Foods merger another long, hard look”

  1. Texting for cheaper tomatoes « Thought For Food Says:

    […] and, theoretically, make the food market more efficient through a text-message based service called SMS Consumatori.  (Crudely translated here.)  How it […]

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