I’m not one to gloat.Â Ok, yes i am.Â As Thom indicated, the court reached what I believe is the right result in the Whole Foods case yesterday.Â I’ve been beating this drum since the merger challenge was announced (I won’t bother linking, yet again, to the series of posts.Â Search for “Whole Foods” up there in the top left corner, if you’re interested).Â The court’s order indicates that we can expect a redacted (93 page) decision sometime soon.Â I very much look forward to it.
Just to hedge my bets a little bit, let me note, if I haven’t already, that Kevin M. Murphy was the expert economist for the government.Â He is believed by some to be the Smartest Economist in the World.Â His participation in the case on the FTC’s behalf gives me pause.Â Kevin Murphy doesn’t espouse positions, even for money, that he hasn’t applied his copious analytical skills to evaluating first.Â If he saw some merit in the case, there was probably some merit in the case.Â It will be quite interesting to see the court’s decision, and to get a glimpse into the econometric data and analysis brought to bear.
One final note: Clearly, despite John Mackey’s 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 case in the absence of pricing data would be “astounding.”Â Apparently we need not be astounded; at trial it became quite clear that Kevin Murphy was working with detailed data.Â Â
One more final note:Â As this article notes (at the very end), the last time the FTC was successful in blocking a merger in court was when it blocked the Libbey Glass/Anchor-Hocking merger.Â There is definitely some Schadenfreude in this latest setback, since I worked (for Libbey; not the FTC) on the Libbey merger and have been disappointed in the outcomeÂ ever since.Â Actually, there are some interesting parallels between the cases, some of which I discussed in my posts on this case.Â I hope that we see the court challenging the FTC’s reliance on distribution-channel-delineated relevant markets.Â This is what the court got wrong (IMHO) in the Libbey case.
And a quiz:Â Anyone know the sourceÂ for the title of this post?
UPDATE:Â My “One final note” above is seemingly inaccurate.Â I have it on good authority that we should, in fact, be astounded.Â Â It is true, as I noted above, that Murphy was working with detailed pricing data at the hearing. But it is not necessarily the case, of course, that the detailed data was available when the complaint was filed.Â It does seem to be the case that, as Mackey noted in the blog post I reference above, that the data was not available to the FTC until later.Â Which does seem astounding to me.Â Even if Murphy ultimately pulled together a solid and supportive analysis, if the FTC didn’t have that analysis before bringing the complaint — if, that is, the whole thing was built on a foundation of hot docs — the case should simply never have been brought.Â It will be very interesting to see if the judge was at all moved by the FTC’s inflammatory documents . . . .