FTC and Whole Foods Settle: For What?
Commentary by George Anderson
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
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."
- FTC Consent Order Settles Charges that
Whole Foods’ Acquisition of Rival Wild Oats was Anticompetitive – Federal
- Whole Foods Market and FTC Reach Settlement – Whole
Foods Market, Inc.