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FTC Ruling Says Whole Foods' Rivals Are Other Supermarkets

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I'm a little late on this, but the ruling handed down on the Whole Foods/Wild Oats merger seems extremely significant. The judge ruled to approve the merger on the grounds that Whole Foods is not just competing with other organic grocers, but with the entire supermarket industry. That means it's not creating a monopoly situation by acquiring its presumptive rival.

The ruling is being appealed.

You can download a pdf of the judge's ruling here. The Federal Trade Commission has a whole page dedicated to the case where you can download all the motions and decisions.

The Denver Post summed up the ruling nicely in a story on Tuesday:

Acquiring Boulder-based Wild Oats Markets Inc. would not eliminate competition for Whole Foods Market Inc. because the natural- and organic-foods chain also faces competition from traditional supermarkets, a federal judge said in a ruling released Tuesday.

In his 93-page decision, U.S. District Judge Paul L. Friedman explained why he denied a request by the Federal Trade Commission to block the proposed $760 million merger of the two companies.

Friedman issued his decision Thursday, but it wasn't made public until the companies redacted trade secrets. The FTC has appealed the ruling and is seeking an injunction pending the appeal. The deal remains on hold while an appeals court gathers information from both sides.

The judge's ruling meshes with what we found in our August cover story.

Here's a little excerpt:

Across the country, similar stories are playing out. Conventional grocers, including the three biggest players, Kroger Inc., Safeway Inc. and Supervalu Inc., are increasingly going back to older stores and renovating and expanding them rather than building new stores. They are bringing in more prepared foods, wine selections and other new departments. The mainstream grocers are finding the moves help them compete with the proliferation of chains like Wild Oats and Whole Foods. It also helps distinguish them from Wal-Mart, Costco and Target, who in the past decade have gobbled up huge shares of the grocery market.

“All the major chains are reinvesting in their existing infrastructure,” says Joe Bona, president of the retail division of Colemanbrandworx, a global branding agency. The firm has created new prototypes for several grocery chains including Pathmark, Stop & Shop, Shaw's, Safeway Canada and Japan's Jusco.

For their part, Swearingen says, Casto and Kroger are looking to emulate what they've done at Dublin Plaza at other centers. “Over the last couple of years, we've spent more time with Kroger on renovations and expansions versus new development,” she says.

Here are some other posts on Whole Foods.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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