Saturday, July 7, 2007

Sowing the Whole Foods, Wild Oats Merger 

The FTC’s opposition is made of free range garbage

Filed As:  Economic principlesGeneral

Consumers across the country will lose if the Federal Trade Commission successfully blocks the proposed Whole Foods and Wild Oats merger in court. The FTC claims this glutton-free combo would lead to higher prices for natural and organic products in markets where they compete. This argument is built on free range garbage, and so is the FTC’s effort to block the organic marriage.

One need not do deep-forest research to conclude that the FTC should put away its stop sign. Simply put, a Whole Foods / Wild Oats merger would create healthier competition. These companies are not the only food game in the cities where they are located. WF and WO, merged or not, compete against other stores for customers. This competition helps keep prices down.

However, the obvious is not so obvious to the FTC. A Wall Street Journal Online article notes, the FTC “is taking the position that the natural- and organic-foods market is distinct from the wider grocery market, which is increasingly moving into the natural-foods niche.” The FTC’s faulty logic is mindful of Oregon liquor laws that allow me to take my child into a restaurant that sells alcohol, but prevents me from taking her into a bar that serves food.

Take a casual stroll through major food stores throughout the US: They are obviously carrying more and more natural and organic food selections. In fact, “old school” grocery stores are formidable competitors for both Whole Foods and Wild Oats. In a June 6 WSJ law blog Peter Lattman reports, “A Wall Street analyst told the Times that 74 percent of natural and organic foods were now sold through conventional supermarkets and the like.” One must wonder, why does the FTC want to protect the team that is winning 74-26?

If there is concern at the FTC, it should be directed at counterproductive local, state and federal rules, regulations and laws that drive up the cost of doing business, which drive up food prices. Government-made obstacles also hinder competitors from emerging to challenge the status quo. Wait just a tick, by blocking the merger of Whole Foods and Wild Oats that’s exactly what the government FTC seeks to do: Hinder healthy competition.

 

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