Comments on: Whole Foods: Where's the [premium, natural and organic] beef?

By: TRUTH ON THE MARKET » I am so smart, s-m-r-t. . . I mean, s-m-a-r-t.

TRUTH ON THE MARKET » I am so smart, s-m-r-t. . . I mean, s-m-a-r-t. — Fri, 17 Aug 2007 17:14:58 +0000

[...] belief to the contrary, there was detailed pricing data available to the government.Â I suggested, following Mackey’s claim that the FTC didn’t likely have such data, that bringing this [...]

By: Geoffrey Manne

Geoffrey Manne — Thu, 28 Jun 2007 16:11:10 +0000

It is not Whole Foods’ obligation to know with certainty what the competitive effects of this merger will be; that burden rests with the FTC. Mackey’s point is that the FTC can’t possibly know that prices will go up following the merger because the FTC hasn’t done the analysis (this is to say nothing of the FTC’s inability to know what the dynamic effects of the merger will be). He also points out that he believes that the effect will actually be to lower prices. I don’t think Mackey needs to do a study to have a decent sense of the market. But that’s neither here nor there. The FTC does have to do a study before bringing suit. It is the FTC’s obligation to be fairly certain that its action–costing the economy millions of dollars–is not frivolous. And, finally, Mackey suggests that they have done some studies and that they support his positions. One example:

Our pricing surveys indicate that in markets where Whole Foods directly competes with Wild Oats that on average Whole Foods prices are significantly lower than Wild Oats average prices.

This is not the precise study the FTC ought to undertake, but it is some indication that Mackey is not speaking from ignorance.

By: HKE

HKE — Thu, 28 Jun 2007 02:55:13 +0000

Whether or not you believe the FTC’s case has merit or not, there is an inherent flaw in John Mackey’s logic used to criticize the FTC. Mackey’s basic argument is that the FTC is wrong to predict prices would “likely” rise to the merger because they have not looked at actual pricing data. If so, then the reverse has to be true: it is wrong to predict prices would NOT rise due to the merger without looking at actual pricing data. Therefore, when Mackey states, “Whole Foods quality, service, and prices are totally unrelated to whether Wild Oats competes with us in any particular market or not,” we should be asking Mackey where is his pricing study? (If you are prone to argue that Mackey does have a pricing study, then my question is where is it? Why not talk about it? Why not mention it as part of the volumes of documents given to the FTC? Why not use it as part of the public defense of the merger? I think the reality is that neither the FTC nor Whole Foods has a sufficiently detailed pricing study, at this point, to address the antitrust issues in this case with greater certainty.) Therefore, by criticizing the FTC using flawed logic, Whole Foods is also criticizing itself–again, regardless of whether or not you believe the case has merit or not.

By: Alan Gunn

Alan Gunn — Sat, 23 Jun 2007 18:37:04 +0000

The antitrust casebook I used in law school in 1970 (Handler & somebody, I think) had a make-believe case called “United States v. Joe’s Delicatessen,” about a deli owner charged with monopolizing the market for deli foods at a particular intersection in Washington, D.C, by buying the deli across the street. One of my classmates didn’t get the joke. Perhaps he’s now at the FTC.

By: AC

AC — Thu, 21 Jun 2007 21:28:43 +0000

I initially assumed that the FTC had been infiltrated by writers from The Onion. But then I read the comments to your June 6 post and saw that there are people who take this seriously.

By: Steven Donegal

Steven Donegal — Thu, 21 Jun 2007 19:47:08 +0000

Can anyone understand why the FTC brought this case?

A senior FTC staffer likes Wild Oats better than Whole Foods and doesn’t want to lose his market?