Pointless Case Against Whole Foods Is Settled

As it pursued its ridiculous, months-late attack on Whole Foods' acquisition of Wild Oats Market, the Federal Trade Commission remained silent. Now that the case has been settled, with Whole Foods agreeing to sell off 32 former Wild Oats stores, FTC Chairman Jon Leibowitz is finally talking. And he sounds ... ridiculous.

"As a result of this settlement," he said in a statement, "American consumers will see more choices and lower prices for organic foods. "It allows the FTC to shift resources to other important matters and Whole Foods to move on with its business."

(UPDATE: To be fair, as an FTC spokesperson just reminded me, Leibowitz has been head of the FTC for only a few days, and it may well be that he expedited this silly businesses just to make it go away. Still, he said what he said.)

It's wholly unclear on what basis Leibowitz believes there will be "more choices and lower prices." As Whole Foods' CEO John Mackey has said all along, the chain, with or without Wild Oats, faces increased competition as mainstream grocers bulk up their offerings of organic and natural products. Wal-Mart sells organic foods. The basis of the FTC suit was that there is a separate, distinct market for organic foods. That was true at one time. It is no longer true.

For evidence that there is plenty of "choice," witness the crowds of recession-battered consumers fleeing away from Whole Foods and toward Safeway, Kroger, and others. If Wild Oats still existed, they would not be going there looking for bargains.

As for Leibowitz's desire to move the FTC on to "other important matters" and for Whole Foods to "move on with its business," he's as late as his agency was when it decided, well over a year after the acquisition was complete, to continue going after Whole Foods.

It's possible that selling off 32 former Wild Oats stores will actually help Whole Foods by raising needed cash for the chain. Mackey himself has said the acquisition was badly timed and that he wished he hadn't done it. But it's not clear who might buy those stores—some of which are actually closed—and for how much.