Four Lessons from the Whole Foods Case

Abstract:     
This article examines the recent district court decision rejecting a Federal Trade Commission (FTC) challenge to the proposed merger of organic grocers Whole Foods and Wild Oats. The article contends that the district court was right to reject the FTC's challenge and identifies four principles that should guide future merger investigations: (1) "hot documents" defining the market, demonstrating apparent motivation, or predicting effects should be ignored; (2) unique distribution channels should not be deemed "markets" unless they significantly reduce transaction costs; (3) merger analysis should better account for business trends and productive efficiencies; and (4) the deck should not be stacked so heavily in the favor of the FTC.

Keywords: Whole Foods, Federal Trade Commission, FTC, regulation, mergers, policy, anticompetitive, productive efficiencies

JEL Classifications: G34, G38, K21

Accepted Paper Series