John Mackey, Whole Foods and the Wild Oats Merger

According to an article published by CNN, John Mackey (the CEO of Whole Foods) feels singled out by the FTC's attempt to block the Whole Foods/Wild Oats merger.

Whole Foods is the largest seller of organic and natural food, and it had planned to acquire Wild Oats, until the planned merger was blocked by the FTC (for anti-competitive reasons). Mackey says:

Look at the track record of the FTC in the last six years. They have approved 96 oil and gas mergers. They approved Smithfield buying the No. 2 pork producer, giving them around 30% market share in the U.S. [In 1999], they approved Exxon and Mobil merging. It's ludicrous to single [Whole Foods] out for anticompetitive reasons. [The rules] are obviously being selectively enforced.

Mackey has a good point. It seems odd that the FTC would block the merger of two natural foods companies, when they have approved the merger of large oil and gas companies, and other special interests. In the CNN article, Mackey goes on to say that Whole Foods will focus on opening new stores in the future, instead of acquiring them. This will prevent entanglements with the FTC. He is quoted as saying:

You can open as many stores as you want without permission form the FTC, but if you try to buy stores, that requires permission. The solution is obvious: We won't be buying stores, we'll be opening them. You don't see Wal-Mart acquiring anyone in the U.S. anymore. It's easier for them and us to just open stores.

Other interesting points from the article:

• If the merger succeeds, Wild Oats prices will be lowered.
• Whole Foods adapts certain stores to fit the culture. For example, in London, Whole Foods has an organic pub where customers can buy organic draft beer and wines.
• When considering where to open new stores, Whole Foods looks at the density of college grads. Mackey says Whole Foods "caters to the well-educated [because] for people to change their dietary habits requires that they be well-informed."
• Whole Foods has tripled its supply of local food in the past year, and is loaning up to $10 million a year to local producers. 13 loans to local producers have already been made this year.
• Whole Foods has a positive effect on real estate property values. When Whole Foods opened in Chelsea [in New York City], condos above the store went up 10% in price on opening day. This has caused some real estate investors to buy up property in neighborhoods where a Whole Foods store is slated to open.
• Whole Foods is seen as a highly-desirable tenant by property developers because of its effect on real estate prices.

I hope the merger succeeds. It's sad to see the FTC apply rules selectively. I think it comes down to lobbying, and unfortunately, Whole Foods doesn't have the same lobbying power that the oil and gas industries have.