In a poll conducted by RetailWire in June 2007, 80 percent of respondents said they believed the Federal Trade Commission (FTC) was wrong in trying to block the merger of Whole Foods and Wild Oats. The basic argument against the FTC action was that it was taking too narrow a view of what constituted competition in natural/organic foods and products business.
In July of the same year, a federal judge ruled that he would not prevent the deal between the two chains. At that time, 79 percent of those responding to another RetailWire poll said the combined company would be somewhat or much stronger than as separate entities. Consensus among respondents, however, was that Whole Foods would not have a huge advantage with many much larger grocery chains including Walmart, Kroger, Safeway and others looking to grab share of the natural/organic market.
Nearly a year later, well after Whole Foods and Wild Oats were deep into the merger, the FTC was successful in getting a federal appeals court to overturn the previous ruling and requiring the agency and retailer to go back to work something out or contest the case in the courts.
Fast-forward to last week and Whole Foods and the FTC have reached an agreement that will require the grocery chain to divest 31 Wild Oats stores (19 that have already been shuttered) in 12 states along with one store operating under the Whole Foods banner. In addition, Whole Foods will need to relinquish the rights to the Wild Oats name, allowing it to be purchased by a potential competitor.
Discussion Questions: What exactly was accomplished by the settlement between the FTC and Whole Foods? Was it all worth it from the standpoints of taxpayers, consumers, competitors, vendors and others with a stake in the outcome? What do you expect to happen with the stores that have to be sold as well as the Wild Oats name?
[Author's Commentary] Is it possible that Jon Leibowitz, chairman of the FTC, could say the following with a straight face? "As a result of this settlement, American consumers will see more choices and lower prices for organic and natural foods."
Will consumers benefit from the settlement between the FTC and Whole Foods?