FTC Is Nuts To Block Whole Foods-Wild Oats Merger

Last Updated Aug 20, 2007 7:20 PM EDT

Whole Foods' flagship store in Austin, TexasIt makes no sense -- how could the FTC file suit to block the Whole Foods-Wild Oats merger? The combined organization wouldn't reach even one-third the size of Safeway, Inc. -- and that's just one among dozens of giant grocery companies. Not to mention Wal-Mart! So where's the disconnect? The FTC has erred in defining the relevant market. If you consider only the natural foods segment, it's right to think that a Whole Foods-Wild Oats marriage would hurt competition. But these two groceries are competing way beyond natural foods, going head-to-head with supermarket monoliths like Kroger and Wal-Mart. The merger would give natural foods a better chance. Whole Foods chairman John Mackey says he'll work together with Wild Oats to challenge the suit, and believes that:

"The FTC has failed to recognize the robust competition in the supermarket industry, which has grown more intense as competitors increase their offerings of natural, organic and fresh products, renovate their stores and open stores with new banners and formats resembling Whole Foods Market," he said.

That's a key observation: other supermarkets are investing millions to mimic the Whole Foods shopping experience. Safeway's recent "lifestyle" initiative has given rise to the "O" organic brand, paralleling the Whole Food's 365 private label. And Safeway stores are getting premium remodels to upgrade their appearance. Wal-Mart, too, has been moving huge amounts of natural and organic foods. So rock on, Whole Foods and Wild Oats, and fight back this FTC blunder.

(Image of Whole Foods' Flagship Store by That Other Paper (Austin, TX), CC 2.0)