FTC: Wild Oats Whole Foods Buyout Bad For Consumers

The FTC thinks that Whole Food’s buyout of competitor Wild Oats would lead to increased prices and decreased quality according to a statement issued on June 5. They’re planning to block the buyout. “Whole Foods and Wild Oats are each other’s closest competitors in premium natural and organic supermarkets, and are engaged in intense head-to-head competition in markets across the country,” said Jeffrey Schmidt, Director of the FTC’s Bureau of Competition. “If Whole Foods is allowed to devour Wild Oats, it will mean higher prices, reduced quality, and fewer choices for consumers.”

According to the FTC, the buyout of Wild Oats by Whole Foods would violate Section 5 of the FTC Act which prohibits “unfair methods of competition,” and Section 7 of the Clayton Act, which prohibits companies from acquiring their closest competitor.

Whole Foods claims that the FTC fails to recognize that other retailers like Walmart are moving into the organic market and are thus competing for Whole Food’s business. We’d say, “Yummy salad bar, but too expensive.” Sadly, no one asked. —MEGHANN MARCO

FTC Seeks to Block Whole Foods Market’s Acquisition of Wild Oats Markets [FTC]
FTC Moves to Halt Whole Foods Deal with Wild Oats [NPR]
(Photo: cmorran123)

Comments

Edit Your Comment

  1. davere says:

    I hope they use the same line of reasoning for the proposed XM-Sirius merger.

  2. CyGuy says:

    And if the deal goes through they would actually RAISE their prices?

    Whole Foods prices are already so high, I don’t know that they would be able to raise their prices that much without people looking for alternatives like Trader Joes, or the organic sections of Wegman’s, other upscale grocers (Harris Teeter, etc.) or even Walmart (tho I don’t think the typical Whole Foods shopper gets to Walmart very often).

    I think the real losers were their to be such a merger would not be the consumers as they will have the choices listed above, but the suppliers such as organic farmers who lose leverage when negotiating prices for their produce.

  3. speedwell (propagandist and secular snarkist) says:

    Here in Houston, we have no Wild

  4. Seth_Went_to_the_Bank says:

    This is weird. The current administration seems to go out of their way to ignore anti-trust and competition issues. Why is this an issue?

    Wild Oats and Whole Foods merging would change very little. They generally are in different regions and areas. In the past, Whole Foods absorbed Fresh Fields and Bread and Circus without a word from the government.

    Am I crazy or are they just busting on Whole Foods because their customers are the stereotypical enemies of the GOP? (Not that they are in reality – their customers are quite diverse – but reality is not the issue here).

  5. speedwell (propagandist and secular snarkist) says:

    how did that happen? Anyway, we have no Wild Oats here, and the Whole Foods Market is the cheapest alternative for what they sell that other people don’t (soymilk, organic packaged food, bulk nutritional yeast, other bulk bin stuff)…

  6. skrom says:

    Once AGAIN the DEFINITION of organic…


    1. noting or pertaining to a class of chemical compounds that formerly comprised only those existing in or derived from plants or animals, but that now includes all other compounds of carbon.
    2. characteristic of, pertaining to, or derived from living organisms: organic remains found in rocks.
    3. of or pertaining to an organ or the organs of an animal, plant, or fungus.
    4. of, pertaining to, or affecting living tissue: organic pathology.
    5. Psychology. caused by neurochemical, neuroendocrinologic, structural, or other physical impairment or change: organic disorder.Compare functional (def. 5).
    6. Philosophy. having an organization similar in its complexity to that of living things.
    7. characterized by the systematic arrangement of parts; organized; systematic: elements fitting together into a unified, organic whole.
    8. of or pertaining to the basic constitution or structure of a thing; constitutional; structural: The flaws in your writing are too organic to be easily remedied.
    9. developing in a manner analogous to the natural growth and evolution characteristic of living organisms; arising as a natural outgrowth.
    10. viewing or explaining something as having a growth and development analogous to that of living organisms: an organic theory of history.

    Therefore ALL FOOD IS ORGANIC, and all food stores are competition for organic food. I really wish people would stop making up their own definitions for words. If they want to advertise pesticide free or something, the CALL it pesticide free.

  7. jurgis says:

    @Seth_Went_to_the_Bank: Actually in Colorado we have both and they are quite different.

    Wild Oats does much more “on site” baking/cooking/preparation. For example, they have a sushi chef during the day and you get sushi made to order. Whole Foods doesn’t, their sushi is pre boxed and shipped in (and it’s not nearly as good). Whole Foods tends to be bigger, but Wild Oats tends to be better: higher quality store brand food, better baked goods, etc.

    I’ve been shopping at both for a while and honestly, I prefer Wild Oats by far. Whole Foods seems kind of “Wal Martish” in comparison (big less quality).

    Price wise they are pretty much the same.

  8. jurgis says:

    @skrom: If you are going to play “word police” at least be correct…

    From Merriam Webster:

    ” of, relating to, yielding, or involving the use of food produced with the use of feed or fertilizer of plant or animal origin without employment of chemically formulated fertilizers, growth stimulants, antibiotics, or pesticides”

    And I will provide a reference

  9. jurgis says:

    @jurgis: Oh and the Oxford English dictionary says the same thing:

    “2 not involving or produced with chemical fertilizers or other artificial chemicals. “

    check it

  10. TPIRman says:

    @Seth_Went_to_the_Bank: Well put, and agreed. Daniel Gross wrote an excellent article in Slate recently making a similar argument. Basically it asks, why does SBC+AT&T get a free pass while Whole Foods+Wild Oats gets such intense scrutiny?

  11. skrom says:

    @jurgis:
    Yeah they ADDED that definition when somebody decided to call that kind of food organic as a marketing gimmick. Check any dictionary from 1975 and you wont see a HINT of that definition. Its still just the hippy aisle to me. All the food is fake. Fake milk, fake meat, fake cheese etc..

  12. spidra says:

    @Seth_Went_to_the_Bank: The current administration seems to go out of their way to ignore anti-trust and competition issues.

    Actually, several recent administrations both Democratic and Republican have have been lax about enforcing anti-trust law. Of course, I find it interesting that the FTC comes down on two pseudo-hippie food stores (not that I think they’re wrong in their decision) but that the government let the Adobe-Macromedia merger sail right through.

  13. lyndyn29 says:

    @jurgis: Agreed, but Wild Oats is kind of Targetish, in my experience. (i.e. very loud We’re-Not-Walmart! noises and a less horrid shopping experience, but marginally better, if that, under the hood, so to speak.)

    I’ve seen Wild Oats come into a number of communities and buy out well-established and much-beloved health food stores, with subsequent increases in price and declines in quality and customer happiness. Sound familiar? If this merger goes through, I hope the Whole Wild Supermarket keeps itself to the Denver Metro area; we still have some good independents down south that we’d like to keep.

  14. AcidReign says:

    …..@Cy Guy: I’ve been to both Wally and Whole Foods in the last week. I couldn’t afford anything at WF. Well, I did get some Cabernet vinegar for my asparagus. Walmart and Publix are not snooty enough to carry that stuff, yet.

    …..Frankly, the Whole Foods shoppers around here are probably 90% GOPers. My little old Mazda looked damned out of place in the parking lot, what with all the Lexuses, Beamers and SUVs. I even saw a Cadillac pickup truck. WTF?

  15. kbmmike says:

    Anyone else refer to Whole Foods and “Whole Paycheck”?

  16. mathew says:

    Whole Foods are evil. Lovely food, but evil. We get things there only when we can’t get ‘em anywhere else.

  17. speedwell (propagandist and secular snarkist) says:

    “Well, I did get some Cabernet vinegar for my asparagus. Walmart and Publix are not snooty enough to carry that stuff, yet.”

    I shop at Whole Foods regularly, but it was the local grocery store chain HEB where I bought the fifty dollar bottle of balsamic vinegar to put on strawberries. Not their ubersnooty Central Market chain, either, just the corner store.

  18. jgpenzen says:

    This is the best news i’ve heard all day! We have both of them here in my area. My wife and I are trying to feed my toddler healthier foods and we always get pretty much the same thing each week (milk, cheese, yogurt, fruits, veggies, unprocessed lunchmeat, etc. We normally shop at wild oats but occasionally while running errands we’ve found oursleves at whole foods. The last time we did this i compared reciepts from the previous weeks outing to wild oats. WF cost me an extra $25 bucks for essentially the same grocery list

  19. Red_Eye says:

    @davere: Too bad they didnt apply the same logic to all the Baby Bell Mergers…..

  20. kimsama says:

    @skrom: Yeah, I’m still really mad that they are trying to pass off the word “computer” as meaning a machine. Hello! It’s a
    person obviously!

    Seriously, though, there’s a country for people who don’t ever want the meanings of words to change: France.

  21. ancientsociety says:

    Hmmm, I had never considered this case vs. the SBC/ATT merger. Interesting. I have to disagree with the assumption that this gets more scrutiny because of the WF customer’s supposed “leftist” tendencies”. I think it has a lot more to do with the organic industry as a whole.

    The US gov’t has continued to place hurdles before the industry because it generally circumvents the multinational food corporations and their stranglehold on the nation’s food supply.

  22. BStu says:

    Slate had an good article on this last week with some good analysis of how weak and frankly hypocritical the FTC position is. It notes that they don’t overlap in many markets, the size of the merger is still very small, there are numerous other competitors, including traditional grocery stores which are adding natural foods departments rapidly, and the obvious fact that Whole Foods doesn’t need a merger to raise prices. I’d actually bet that the merger might give them the bargaining power to lower prices, if anything. Given the FTC’s history of complete disinterest in antitrust concerns, their sudden devotion is implausible.

  23. ogman says:

    @Seth_Went_to_the_Bank:

    That’s it exactly. In fact, there was an article on Slate about that last week.

  24. QuirkyRachel says:

    @kbmmike: YES! That’s my name for it, too!

    Trader Joe’s rocks!

  25. Lee2706 says:

    I’ve turned around my attitude re: Whole Foods. When I first when in there oh so long ago, I thought, hey what a great place to get good food, all locally grown (according to those flashy posters).

    Oh what I’ve learned in such a short time: it’s all about marketing (not sure if pun is intended)! The smily poster of the “local farmer” but the apples are flown in from New Zealand. Organic tomatos grown in a hothouse in Canada of all places (nothing ‘gainst Canada, but it’s not local to Los Angeles). And like others mentioned, “organic” is just another marketing catch-word so that all the gas guzzling SUV drivers can feel good about what they put in their bodies.

    I read an article in either Slate or Newsweek about how places like Whole Foods help widen the divide between rich and poor. Charge an arm and a leg so that only those who can afford it can get the freshest veggies (or so they label). Why can’t we all get fresh veggies at reasonable prices?

  26. camas22 says:

    @lee

    go to the farmer’s market it’s cheap and fresh.

    are you really worried about the about transportation costs/environmental impacts associated with your food when you live in la?

  27. ZugTheMegasaurus says:

    I’m from Colorado where we have both (as a previous poster mentioned). I used to shop and work at Whole Foods. Now I shop and work at Wild Oats. I prefer it very much.

    Whole Foods runs a lot like a typical chain grocery store. Stock stuff, point customers to an aisle, etc. Wild Oats prides itself on having knowledgeable employees. We’re told to do pretty much anything (within reason, of course) that the customer asks. We can open up a whole bag of chips or sample anything in the store if someone is curious or unsure about a product. Plus, we make a lot of food ourselves, on the same day it’s sold.

    Honestly, I went from Whole Foods to Wild Oats for a reason. I’d really rather deal with Wild Oats, from either the employee side or the customer side. I mean, employees are expected to know what they’re talking about. That just seems like a good practice to me.

  28. Lee2706 says:

    @camas22: In fact I do go the the farmer’s market regularly and I have my own vegetable garden. And my choice to live in LA does not mean I don’t think about or try to make positive changes in my life about transpo/enviro issues.

    What bums me out is Whole Foods’ imagery that leads shoppers to believe that they are buying from their strawberries from the long-time Japanese farmer down the street. When they aren’t. And they are more expensive.

  29. John10101 says:

    Don’t shop and either one. I have worked for both companies and vouch that Wild Oats’ management has their collective heads up their asses and Whole Foods are a bunch of Neo-Nazis.

    This would cause an increase in price because, “They can”. I have no doubt that this would happen seeing as how they are already doing it.

    Also, knowing that Whole Foods hiring pool is Ex-Wild Oats employees you can bet that Whole Foods horrid management is only going to get worse.

    Please don’t take this to mean that I hate either company. I have since moved on and can care less. Shop at smaller markets. Support local businesses and screw corporations