Price War Showdown on Natural and Organic Foods

The online debacle of Whole Foods' CEO John Mackey not withstanding, executives from the natural and organic foods giant appear today before a federal judge in Washington to argue why the chain should be permitted to go through with its multi-million dollar buyout. The Federal Trade Commission, however, will ask a federal judge to block the purchase, stating "the combination of the nation's two biggest and organic food retailers would be a bad deal for consumers." Their suit claims that since Wild Oats was Whole Food's staunchest competitor, a merger would drive up prices and customer service would suffer. Whole Food executives have countered that claim however, contending that retailer Trader Joe's "neighborhood grocery store" is their strongest competitor and that their continued expansion of stores as well as a few conventional grocery chains such as Safeway or warehouse stores such as Costco will actually keep prices and services to the customer in check. Bottom line—the FTC is asking the court for a preliminary injunction to stop Whole Food's buyout of Wild Oats. If the judge blocks the merger, speculation is that the companies will most likely walk away rather than appeal the deal.

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