Ivan, those are good points that Oliva makes at the Mises blog. But there is another interesting aspect that makes this an especially embarrassing case for antitrust supporters. If the Whole Foods-Wild Oats merger is stopped, the main beneficiary would be not small organic stores, but a certain company called Wal-Mart.
Yes, that Wal-Mart! The one that everyone complains is so big and powerful. But it would benefit from anti-trust laws in this case and probably in others involving retail mergers. It is one of the biggest sellers now of organic food, as it is of many things, and if it didn’t have a powerful Whole Foods competing against it, it would likely have even more of this market.
But amazingly, the Federal Trade Commission, in its analysis of the market for “premium organic foods” specifically excluded Wal-Mart, because Wal-Mart sells other things. That’s like saying a hamburger stand would dominate the market for burgers in a given area, because the little stand only sells hamburgers but McDonalds and Wendy’s also sell chicken sandwiches!
In fact, according to news reports, the FTC even argued to stop the merger specifically because the action would be anti-competitive to Wal-Mart. According to a story by the Associated Press, “the agency also revealed how Whole Foods negotiates with suppliers to drive up costs for Wal-Mart Stores Inc.”
Oh, no, can’t have that! Why if this merger goes through, Wal-Mart might make only $91 billion in sales instead of $92 billion. Perish the thought!
As Oliva, notes this is only Round 1 of the case that Whole Foods has won. But Bush administration might seriously want to pressure the FTC (an independent agency that the President only has limited powers to remove the members he appointed) to drop this case. The last thing the administration needs to be accused of is betraying free-market principles to protect Wal-Mart!