You know when you’re asleep, and you dream that you’re falling, and then you
wake up all startled and confused? I think the Federal Trade Commission is a
bit like that. It’s been asleep for a long time: the last deal it blocked in
the retail space was a decade ago, when Office Depot tried to buy Staples. But
today it seems to have woken up and fired
off a salvo in a most peculiar direction: at the planned merger of Whole
Foods and Wild Oats.
Neither company is particularly enormous – they have barely 300 stores
between them – and there’s hardly been much of a public outcry about the
anticompetitive implications of the United States having one less chain of overpriced
organic grocers. Jim
Mahar has more:
First of all it is saying that Natural and Organic grocers are a different
market than other grocers. Which is clearly not the case (don’t believe me?
Price an organic item too high and see everyone go to the non organic variety!).
Secondly, with the widespread adoption of "organic" products by
national producers (see Hunts, Kraft, etc.), it is unclear whether the "natural
and organic" grocers will have the market to themselves.
Mahar doesn’t even mention the big push by Wal-Mart into the organic space,
which, one might think, might force some degree of consolidation in the rest
of the industry. And in any case, I can’t remember the last time I went into
a supermarket which didn’t offer, for a premium, organic produce. The
whole thing makes very little sense: could it be, as Dana
Cimilluca suggests, that the FTC is reacting to perceived pressure from
Congress? If so, this move could destroy quite a lot of shareholder value in
the service of massaging a few political egos.