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The Wall Street Journal this morning reports that the Federal Trade Commission (FTC) has gone to court to try to stop Whole Foods from seeing the financial information from other retailers that the FTC used to make its case that the natural/organic retailer should not be allowed to acquire Wild Oats for $565 million.

The FTC says, according to the Journal, that its “ability to enforce antitrust laws would be harmed by letting Whole Foods see the information.”
KC's View:
I’m sympathetic to the FTC’s plight here…after all, at some level it doesn’t seem fair to give Whole Foods all this data about its competition.

Here’s how the Associated Press reports it: “The FTC said in a court filing made public Thursday that if companies knew their business secrets could be turned over to a competitor such as Whole Foods, they wouldn't cooperate with government investigators.

Other companies including Wal-Mart Stores Inc., The Kroger Co. and Trader Joe's Co. have asked to enter the case to oppose Whole Foods' request for more access to their information.”

Perfectly understandable.

But wait a minute. Isn’t the essential FTC case that Whole Foods and Wild Oats operate in their own industry, and that they don’t really compete with Wal-Mart, Kroger and Trader Joe’s?

My argument all along has been that Whole Foods and Wild Oats are niche players in a much bigger industry, and that there is plenty of competition out there – generally, in fact, lower priced competition – in the natural/organic segment. And the fact that the FTC doesn’t want to provide financial data on these competitive companies, and these companies don’t want it given to Whole Foods, suggests that this is the reality of the situation.

The FTC ought to give up now and crawl back into its bureaucratic hole in the ground. Or maybe go oppose the A&P acquisition of Pathmark, which probably really isn’t good for anyone.