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Whole Foods/Wild Oats Merger: Deal or No Deal?

by Jasmin Malik Chua, Jersey City, USA on 08.21.07
Food & Health

Whole Foods
Photo credit: Mark Pritchard

Another day, another setback for Wacky Mackey's organically grown empire.

On Thursday, Judge Paul L. Friedman of the Federal District Court in Washington, D.C. gave Whole Foods the go-ahead to snap up Wild Oats Markets, its next-biggest competitor in the natural-foods biz, for a cool $565 million.

Not so fast, said the Federal Trade Commission (FTC), which then filed a motion to stall the deal pending the outcome of its appeal of Judge Friedman's ruling.

But the FTC made an oopsie of its own, even as it tries to squash the merger on the grounds that it would "create a monopoly in the operation of premium natural and organic supermarkets." Federal regulators inadvertently let fly dozens of trade secrets in public court documents, including Whole Foods' plans to close 30 or more Wild Oats stores to double its own revenue.

Also not meant for public eyes was the company's strategy of negotiating with vendors to drive up costs for Wal-Mart stores.

Filed electronically by FTC lawyers, the documents were not meant to be released publicly, but words intended to be blocked out were actually just electronically shaded black, meaning that they could be searched, copied, pasted, and read in versions downloaded from court computer servers.

When court officials caught on to the mistake, they replaced the filling with a version using scanned pages of the edited documents, but by then the Associated Press had already downloaded the original, unedited version from the public server.

Let's not forget CEO John's Mackey's own online sock-puppet identity, which he used on Yahoo Finance's bulletin boards to champion his own company, while blasting Wild Oats.

Someone hand us a Dramamine because we have a feeling this surreal ride is FAR from over. ::The New York Times and ::AP

See also: ::John Mackey's Online Double Life and ::The People vs. Whole Foods

Comments (8)

I've never been a huge fan of Whole Foods. A few months ago, I was looking for food products for an event about global warming. Whole Foods could not furnish locally grown or native-only foods for a fruit plate, nor could they produce egg-less pastries or desserts. You'd think that if you needed such a product, Whole Foods would be the most obvious choice. It is my hope that Wild Oats will remain in business. The last thing we need is a monopoly on a wholesome food product.

jump to top Allison says:

I am personally a huge fan of Whole Foods. In our town of Pasadena, CA we have a WF and a WO. Hands down I prefer WF in terms of selection or produce and other organic supplies and products. I know that WF has gained something of a negative reputation and Mackey's sock puppet adventures did nothing to improve it, but I still think that WF has done the most of any major chain to raise the expectation levels of labeling and transparency of produce. No, they are not perfect, but I remain a big fan. No, I am not John Mackey! :-)

jump to top chris brandow says:

As much as Whole Foods has gotten on my nerves lately I still have to say I prefer shopping there to anywhere else. They certainly aren't perfect and unfortunately the larger they get I think the worse things are getting but given the choice between the large chains like Dominicks here in the Chicago area (owned by Safeway) and Whole Foods I'll choose Whole Foods hands down.

Now...if you want to see how Whole Foods should be handling themselves on local food I don't think that anyone need look further than the east coast chain Wegmans. They know how to do locally grown food right (see my post here)

jump to top Jason Kratz says:

What does it take to smack Whole Foods/Mackey devotees into waking up and smelling the reality? This company is in no way "the truth and the light" and yet a handful of people insist on acting as if Mackey were our food messiah.

This recent incident will probably have about as much effect on them as trying to rationally talk a Jonestown resident out of their kool-aid break, but I for one appreciate hearing about it.

jump to top JoshA [TypeKey Profile Page] says:

Though I'm aware WF isn't perfect, I still really enjoy shopping there. So far as I am aware they really do try to promote earth/people friendly policies. I really belive that if all supermarkets acted like whole foods people in this country would take much better care of themselves. They really push organic, sustainable practices and healthy eating. Very few if any products contain hydrogenated oils, high fructose corn syrup, various artificial ingredients, etc.-and yes I am a prodigious label reader!
I'm certainly not fond of large corporations creating monopolies for themselves. However, it might not be such a bad thing so long as WF keeps up what I see as a respectable quest to promote healthy eating/farming/etc. If all supermarkets acted as they do people in the US might be much, much healthier and happier. I'm personally willing to pay slightly more if that were the outcome.

jump to top JayZ says:

Alot of people seem to be anti-WF, and I understand that they are turning into the Walmart of their industry. What bothers me tho, is that those people don't offer any alternatives. We don't have WF here, but we do have WO. I can barely shop there because they carry hardly anything local, vegan, or different. The preferred alternative would be smaller, locally own organic/natural food stores. There are a few around, but I prefer not to spend $5 on a smashed avocados and tomatoes, which is mostly all you can get at the local places. I also don't like having to make that my lunch hour because they are only open from 10-4. I really would prefer to spend my money and local shops, but the local shops need to realize they need to serve the customer, the customer doesn't serve them.
he WFs in Dallas, San Francisco, Denver and Boulder have all be leaps and bounds ahead of the quality(and sometimes prices) of WO or any local store I've been to.

jump to top mrbell says:

Here in Los Angeles, many of the WF carry lots of local produce which is labeled as such, but this is CALIFORNIA. Maybe we should be looking to the consumer to share some of that blame. Many places around the country don't have much variety when it comes to locally grown produce - esp in the winter months. How will a store compete when shoppers want to eat their favorite produce year around? Thankfully, the eat local mvt. is educating a lot of people about eating seasonally and locally, but there's a long way to go. WF is a business. Compared to many corporate grocery stores, they are much, much better, but yes, they still act like a corporation.

But unlike many corporations, I have found that WF is pretty receptive to individual requests and input. Perhaps if one were to get some like-minded friends and get a dialogue going with the head of the produce dept, maybe things can change at your WF.

jump to top RA says:

I do not believe this merger will be beneficial to consumers at all!
It's a monopoly, and I only expect Whole Foods to come along, and the prices to go forever up.

Here's an an excellent example.

I live in Vancouver.
A lovely Caper's opened just over a year ago nearby.
A giant new Whole Foods is scheduled to open in 2008-2 blocks away from Caper's.

Here's what really burns me.
Caper's is a COMMUNITY Market that began in Vancouver.
It's lost that.
It will no longer be a Community Market but a place reeking of corporate greed where eagerness to control market and product will surely result in increased prices and decreased supply to us the consumers.

I dont expect to support either in the future.
I will purchase my organics at another small market, supporting local business.
Thankfully, there are plenty of options in Vancouver.

jump to top tessa says:

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