Whole Foods vs. The FTC, Part II

The Stalwart submits: It was pretty shocking when the FTC announced its decision to block the Whole Foods (WFMI)/Wild Oats (OATS) merger. Basically, the FTC's definition of the market seemed extremely narrow, and completely at odds with reality.

Tuesday, the FTC unveiled its complaint, and the most damning bit seems to be some comments that Mackey made to his board:

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."

Pretty damning? Maybe, but it seems slightly odd that the FTC seems to be basing its decision on what Mackey said to his board, rather than, oh I don't know... reality. As Felix Salmon points out, Mackey's statements can totally be spun another way:

In what way, exactly, is this supposed to be damning? It seems to me that Mackey, here, is essentially saying that any supermarket could become a direct competitor of Whole Foods if it started concentrating less on prices and more on things like store experience.

Well, this story will undoubtedly go several chapters, though the lesson here would seem to be pretty clear: If you're a CEO, try hard to keep the Gordon Gekko talk off the record.

Comments

[Big Daddy:]

I don't agree. I'm NEVER gonna go to WMT to buy organic food. Ever. Get it?
I would however love it if Wild Oats opened up a similar to WFMI store in my neighborhood and provided
some stiff competition along with those dreadful price wars Mackey referred to in some of his other comments.

And, with WFMI hit on the flank by OATS maybe Kroger will open up a new chain (separate from it's flagship) that is exactly like these two but 20-30% cheaper.

Thankfully the FTC got involved so my dream can still come true.

Also, on the vendor side, having more than one place to see specialty organic products to a perfectly matched market prevents WFMI from being too tyrannical in terms of pricing etc

2007 Jun 20 10:42 AM