Whole Foods Responds to FTC

By John Mackey, June 14, 2007  |  Meet the Blogger  |  More Posts by John Mackey
Many of you have probably heard about the FTC challenging our proposed merger with Wild Oats. Here's a link to some detailed information that we presented to the FTC summarizing our case. Watch for a more extensive blog post from me next week.
Category: ftc, merger, wildoats

 

16 Comments

Comments

jdavidb says ...
I apologize for the fact that people who claim to represent me are acting as dictators in your private affairs. Be assured these people are not truly my representatives. It's a shame we can't just all respect the dictum "Thou shalt not steal." Then you could best serve the public by arranging your privately-owned businesses as seems best to you.
06/15/2007 7:15:52 AM CDT
L. Frogg says ...
What was the motivation at the FTC? I smell politics. As someone who worked 20 years in that business I think I know that a duck is a duck. Here is what I think I know. Ed Gillespie in the former head of the Republican National Committee. He is very close to the Bush administration and other high ranking Republican leaders. Until a few days ago when he was tapped to go into the White House as a top advisor to the President he was the top guy at a top tier lobby shop in DC. Funny, that he also represented Safeway. Safeway has been spending huge amounts of capital to compete with the Whole Foods and Wild Oats in the world and to do better on their overall margins. They have not been happy with Whole Foods for these reasons for a long time. The original government thoughts on the merger likely came for the overall political Department of Justice, where the While House and top Republican officials have been putting their political cronies into high ranking jobs. There is no direct evidence that Gillespie played a role here but I somehow think he may have. Just another point. The other large merger that the FTC is looking at is XM Radio and Serius Radio. Funny...both those groups have hired Gillespie's firm....maybe they have influence over those matters...you think so?
06/15/2007 10:29:23 AM CDT
EDWARD REISS says ...
whole foods is right for wild oats .
06/15/2007 1:54:09 PM CDT
NHuneycutt says ...
If I didn't know better (and maybe I don't) I'd say the Bushies are trying to annoy blue staters as much as possible with this blocked merger. See Daniel Gross' Slate column.
06/15/2007 2:54:35 PM CDT
R Spencer says ...
Is it possible for you to post contact numbers where the general public can provide input/comments and/or support for the July FTC Review of the proposed Whole Foods Merger? Given the huge size of other food retailers I find it incredulous that there would be objections to this corporate move. Apparently you can be a Safeway, Krogers, Raalphs, Hughes, Vons or Walmart and dominate entire regions and that's okay. But merge two companies that sell whole grains with an emphasis on organic food and suddenly the public needs to be protected? If the concern is over competition has the FTC not heard of Trader Joe's? Not only are they in overlapping products and services, in my area there are at least 3 locations where TJ and WF are literally on the same street. FYI, One could say I have a vested interest because I am a shareholder. However the truth is I became a shareholder because I loved patronizing the stores. So my real vested interest is that I would like to see the company flourish because it is hands down my favorite place to shop. If I owned no shares tomorrow, I would be equally supportive and outraged at the arbitrary heavy-handness of the current regulators. Thank You. R Spencer
06/15/2007 5:37:44 PM CDT
Chris Bassil says ...
The Merger of Wholefood and Wild oats will serve the consumer better, and give the combined companies a much bigger purchasing power to compete against Costco, Sam's club and publix and the rest of the supermarkets. they all offer organic and natural food in their stores, as a matter of fact, they are building special sections in their stores dedicated to organic groceries and organice fruits and vegetables, let the FTC go and focus their efforts on Google and Microsoft, FTC is using the taxpayers money to hurt consumers rather then helping them. lots of job securities on the line here, if the merger does not go through and succeed, there will be other means for Wild Oats and Whole food to compete, by reducing the work force and lay off lots of employees where there families need them to make a living, God Bless Whole food and Wild Oats Managements and employees. FTC wake up and leave them alone !!
06/15/2007 9:13:21 PM CDT
Paul says ...
The FTC should focus on the oil companies.
06/15/2007 10:06:16 PM CDT
John says ...
I am the SO of a Whole Foods employee. A significant percentage of our family's paltry portfolio is in WFM, so I've been hopeful that the acquisition goes forward. My comments below are regarding the presentation titled "The Proposed Acquisition of Wild Oats by Whole Foods Market Will Not Substantially Lessen Competition in Any Relevant Market." On Page 12, titled "No Similarities to Staples / Office Depot," statements 5 & 6 regarding Whole Foods / Wild Oats are answered NO. Part of the reason I've been thinking the acquisition would help restore some value to our little portfolio, is that I believe the answer to those questions to be YES. Again, I'm a not very savvy, chump change kind of stockholder, so I'm not challenging the answers; I would just like to understand. Good luck with the hearing; I'm rooting for your (and therefore, our) success!
06/16/2007 8:24:46 AM CDT
wwwizard says ...
Total hypocrisy! This is the same government that allowed Boeing to buy McDonnell-Douglas leaving one (count-em ONE) commercial aircraft manufacturer. Look what they've done with corporate media. How could they turn down ANY merger? The problem is obvious: Whole Foods hasn't been hiring the right lobbyists and lining the right pockets.
06/16/2007 10:04:51 AM CDT
Kyle says ...
Hi, John - I live in the District of Columbia, just found this blog, and love Whole Foods, as well as your operating philosophy. What would be your preferred method of customers reaching out to help you in regard to ridiculous action by the FTC? I suppose I could write Congress person. Is there anything else that Whole Foods is recommending for customer involvement? Thank you, Kyle
06/17/2007 11:30:05 AM CDT
Charles Mukuka says ...
The FTC action is not only counter productive but also undermines the fundamentals of a free market system where barriers to entry are non existent.The latest developments, are of course, very interesting and goes to show how a government arm can abuse the interpretations of its critical role in regulating business practices. Looks more like preaching democracy in one country and then promote dictatorship in the neighboring one. No mergers in Organic market and more mergers in conventional segment. Reading through the FTC lawyer's arguments, I was forced to look at the meaning of "Monopoly" which the Roget's II: The New Thesaurus, Third Edition. 1995 defines as "Exclusive control or possession." And they also argue that the merger would destroy competition and raise prices. Ok, this is very troubling to understand especially when big retailers like Publix, Wal-Mart, Kroger, Safeway, etc are charging in the organic market at full throttle. Maybe, the FTC needs to answer the questions as to why there is an increasing range of 365 value products in Wholefoods Markets and why the wheels of innovation and the WOW factor continue to move fast in this company� The gourmet retailer online news reported in March how Safeway's Organic brand "O" has become available throughout its 1,775 stores in the United States and Canada. I mean all these stores carrying 150 plus lines of organic items. So in simple terms, organic items in Wholefoods market can easily and simply be substituted with so many conventional retailers' organic offerings. In the final analysis, am wondering who needs to be supported. A small successful company in Wholefoods trying to merge with a struggling company and partially benefit from the economies of scales such huge retail conglomerates enjoy; or simply, in the name of justice, drag the wheels of justice and let the two companies continue to incur expenses while conventional stores triples their organic offerings and evasion of the organic market.
06/17/2007 11:31:19 AM CDT
Kal says ...
I live in Pittsburgh and we only have one Whole Foods unfortunatly. The FTC argument is absolutely ridiculous because even if you define the market in terms of natural foods instead of groceries, whole food and wild oats COMBINED only have 20 % of the market which is hardly monopolistic
06/18/2007 9:20:21 AM CDT
paig292 says ...
A couple of readers asked for contact info for the FTC. You may email them at antitrust@ftc.gov. Just remember that the FTC has already made their decision and filed a lawsuit to block the merger, so the case will now be decided in the courts. Thanks for your support, Paige Brady Whole Foods Market Team Member
06/18/2007 11:51:47 AM CDT
Ron Nutz says ...
I am a WFM Team member in PRV West Vancouver. At WFM we are very proud to be a destination for our guests to shop and experience WFM at our location. I am very saddened to hear the FTC would even consider to block the merger with Wild Oats. At WFM we are very successful in the markets we are in due to the level of Guest services we achieve and the shopping experience we give our guests....Bottom line. Most customers shop at grocery stores for one reason..convenience ( location), bottom line. Our guests shop at WFM because they want to...They do not have to shop at our store if they do not want to. Our guests drive by or walk by the big boys (Safeway, Save On Foods etc) to come to Whole Foods Market everyday. At WFM we offer a shopping experience for every guest that enters our location or our website in a very positive manner, no one even comes close to what we achieve for our guests. When we complete the merger we will be able to offer our shopping experience and life experience to more guests in more locations..Bottom line, they will still have the choice to shop elsewhere... I believe at WFM we are here to help the people on this planet to live well and get back to the roots of life. Politics should not come to play when we are just trying to help our guests and new guests improve their lives. Safeway and the Big boys and the FTC should not worry about WFM/Wild Oats...They should learn from us. By learning from us we will hopefully improve the lives of their guests. I believe in free market economy and welcome other companies that want to help people feel good about them selves..Bottom line....
06/19/2007 10:41:56 AM CDT
Robert Rennick says ...
I sent the following email to the FTC: Subject: Consumer comment on FTC suit to block Whole Foods acquistion Date: 6/9/2007 To: antitrust@ftc.gov I'm just an ordinary consumer, and I have never commented on this sort of thing before, but I was astonished to see it. The regular supermarkets in our area see Whole Foods and Wild Oats as direct competitors, at least for a significant portion of their customer base, and have invested in upgrades to handle a large selection of organic foods and "experience" products (such as prepared foods, high end take home foods, bakeries and so forth). Just visit the Safeways and King Soopers (Kroger) in our area and you'll see what I mean. The notion that Whole Foods and Wild Oats combined would own a significant market segment and that they are not in competition with the broader supermarkets defies simple observation. The result of the increased competitive effort by the regular supermarkets is that we go to the 'organic' markets about half as much (or less) as we used to. The need expressed by Whole Foods and Wild Oats to consolidate to maintain any position at all in competition with the massive resources of the major chains is quite understandable. It wouldn't surprise me at all to learn that the suggestion to oppose the merger came from the big supermarket chains as a tactic to make it easier for them to drive both Whole Foods and Wild Oats out of business. What will your response be when Kroger or Safeway announces an acquisition of either one or the other of them? Please don't waste the taxpayer money on this suit. There are many other legitimate issues for you to work on. Robert J. Rennick Vice President and General Manager (Retired) (Digital Equipment Corporation) Colorado Springs, CO =========================
06/19/2007 11:16:16 AM CDT
Dwight S Smith says ...
John Mackey I am a long time Shareholder of both Whole Foods and Wild Oats. I invested in both, contrary to my normal rules of fully checking out all of the details of each company, and I would do the same today. I wanted to own both of these companies because I am a long time customer of both, and they impressed me as the future of the kind of food store where I prefer to shop. Neither are the homey "Mom & Pop" stores that they were when I first came to them; however, I fully understand that the grocery market business is a difficult business to keep up with the challenges, and keep changing enough to stay successful. I would be very happy to exchange my Wild Oats stock for the fair amount of the merged Whole Foods stock should the merger be approved. That way I would retain my full investment in the combined company, which I still consider a valuable asset and example for others to follow, and which promotes fair competition, in all of the communities where they do business. I think that such a merger would be in the best interests of all of us who know and love both companies, and fair competitive marketing. If the government has the mistaken idea that this merger would be a problem regarding the competition, I suggest that they try going shopping. I also shop at Trader Joes, a privately owned company, which competes very well with both Whole Foods and Wild Oats, merged or not, in many market areas. Try many of the other grocery chains big and small. Try some of the small family owned specialty markets, one of which I am parked beside right now, as I write this, which has done very well in spite of having been in the market area of Whole Foods for many years. I see no problem with the proposed merger, regarding competition. I do see a real problem when the government attempts to use its heavy hand to make it more difficult for any business to have the flexibility to do the things, which are necessary for them to prosper and survive in a very competitive business, such as Whole Foods and Wild Oats are in. When I studied Economics at the University, one thing that my teacher made crystal clear is that government almost always messes up a well running system when it substitutes its, well meaning, "judgment" for the normal forces which control normal market operations. Thank you, and if there is ever anything that I can do to help good companies such as Whole Foods and Wild Oats, by all means, let me know. Best regards Dwight S. Smith, d.b.a. icarian enterprises
06/19/2007 8:35:44 PM CDT