Good piece in Slate.com this morning entitled “Bush’s War On Whole Foods,” by Daniel Gross. Excerpts:
• “We're in the midst of a merger mania, and the Federal Trade Commission and the Justice Department's antitrust division—the agencies tasked with assuring that mergers don't harm consumers by reducing competition—have approved almost every deal. If the nation's largest hog producer buys the second-largest hog producer? OK. Telecommunications giants SBC and AT&T want to merge? No problem. Giant supermarket company Albertson's and giant supermarket company SuperValu get together? You got it.
“But when Whole Foods, the extremely successful, bobo-friendly, high-end, blue-state organic grocery chain and Wild Oats, the less successful, bobo-friendly, high-end, blue state organic grocery chain, say they want to merge, the answer is no.”
• “One fear of antitrust types is that a company will buy a rival just to eliminate the competition and thus harm consumers. But Whole Foods and Wild Oats are not like Citigroup and Chase, which frequently have bank branches across from each other. Look at the disparity in sales—$5.6 billion for Whole Foods and $1.2 billion for Wild Oats—and scope. Neither is a nationwide chain. Whole Foods boasts 195 stores, and Wild Oats has 110 stores. Whole Foods has four stores in Manhattan. Wild Oats doesn't have a single store in New York state. Whole Foods has 17 outlets in Massachusetts to Wild Oats' three. Sure, they overlap in a few markets, such as West Hartford, Conn., and Denver. But mostly, the organic chains operate in different places. ‘If Whole Foods is allowed to devour Wild Oats, it will mean higher prices, reduced quality, and fewer choices for consumers,’ said Jeffrey Schmidt, director of the FTC's Bureau of Competition. Yet Schmidt's own region is evidence that these two chains don't seriously compete. He has probably never shopped at a Wild Oats, since there isn't one in the District of Columbia, Virginia, or Maryland, a region that boasts 18 Whole Foods.”
• “We're in the midst of a merger mania, and the Federal Trade Commission and the Justice Department's antitrust division—the agencies tasked with assuring that mergers don't harm consumers by reducing competition—have approved almost every deal. If the nation's largest hog producer buys the second-largest hog producer? OK. Telecommunications giants SBC and AT&T want to merge? No problem. Giant supermarket company Albertson's and giant supermarket company SuperValu get together? You got it.
“But when Whole Foods, the extremely successful, bobo-friendly, high-end, blue-state organic grocery chain and Wild Oats, the less successful, bobo-friendly, high-end, blue state organic grocery chain, say they want to merge, the answer is no.”
• “One fear of antitrust types is that a company will buy a rival just to eliminate the competition and thus harm consumers. But Whole Foods and Wild Oats are not like Citigroup and Chase, which frequently have bank branches across from each other. Look at the disparity in sales—$5.6 billion for Whole Foods and $1.2 billion for Wild Oats—and scope. Neither is a nationwide chain. Whole Foods boasts 195 stores, and Wild Oats has 110 stores. Whole Foods has four stores in Manhattan. Wild Oats doesn't have a single store in New York state. Whole Foods has 17 outlets in Massachusetts to Wild Oats' three. Sure, they overlap in a few markets, such as West Hartford, Conn., and Denver. But mostly, the organic chains operate in different places. ‘If Whole Foods is allowed to devour Wild Oats, it will mean higher prices, reduced quality, and fewer choices for consumers,’ said Jeffrey Schmidt, director of the FTC's Bureau of Competition. Yet Schmidt's own region is evidence that these two chains don't seriously compete. He has probably never shopped at a Wild Oats, since there isn't one in the District of Columbia, Virginia, or Maryland, a region that boasts 18 Whole Foods.”
- KC's View:
-
Good analysis. You should got to Slate.com and read it. And not just because Gross is saying what we’ve been saying.
We also have another thought. The FTC said that it is concerned about reduced customer service if the merger of Whole Foods and Wild Oats takes place.
The sheer lunacy of anyone from the federal government lecturing anybody on the subject of customer service is mind-boggling.
