Wholesale Organic Idiocy

by Mr Juggles

Most commentators believe that the FTC’s decision to block Whole Foods (NASDAQ: WFMI) acquisition of Wild Oats (NASDAQ: OATS) is idiotic because the FTC is making organic food markets out to be a relevant market definition. These commentators would have you believe that the numerous, large supermarket chains who are now stocking more organic goods will provide more competition in the future, even after this merger has been allowed.

But who are the real fools here. The FTC is actually acting with wisdom seldom seen from a government agency. The relevant market is not organic food purveyors but rather supermarkets with service.

The lawsuit quotes [the Whole Foods CEO] 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.” – WSJ

Frankly, I agree. I spent 20min waiting in the deli line at Food Lion last week, only to be sold ground beef that looked like it had been dropped on the floor and then put back in the deli case. I love superior quality and superior service and abhor the idea that Whole Foods could acquire the only other superior provider, Wild Oats. At that point, given their monopoly on quality service, what would happen next? I’ll tell you what: we’d probably all end up paying a huge premium for our smoked gouda and wild Alaskan salmon.

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