A federal judge yesterday gave the thumbs for Whole Foods to buy rival Wild Oats - rejecting the FTC's argument that the deal would stifle competition and lead to higher prices.
Whole Foods operates 177 stores in the U.S., while Wild Oats has about 110. Both are relatively small players in the grocery business, but FTC lawyers argued the combined company would corner the market on premium and organic foods. But U.S. District Judge Paul L. Friedman felt otherwise and his reasoning is detailed in a 93-page court document that is sealed because it contains corporate secrets.
What does this have to do with satellite radio?
Many have felt that there are parallels between the Whole Foods-Wild Oats merger and the Sirius-XM merger. Antitrust authorities in both cases need to decide whether the relevant market is a narrow one, or part of a larger, more broadly defined market.
Of course that's where the similarities end, largely because they are being reviewed by entirely different federal agencies. But with Whole Foods-Wild Oats decision is being closely followed by analysts and industry watchers, to the point that an overflow room in court was required for those eager to learn details about the companies.
And this development adds a new twist to it all.
[AP]
Thanks Daniel!
There is no question this should be viewed as a win for pro-merger forces.
i'm kinda bummed that the judge sealed his decision, though. i'd love to know why he decided the way he did.
I still don't like the comparisons between the two mergers. 'Antitrust authorities in both cases need to decide whether the relevant market is a narrow one, or part of a larger, more broadly defined market.' sure. But, I've always thought that the entertainment industry is so vast in ways of delivering entertainment nowadays, that it's competition is it's price balancing. I see food as being greatly more important and needs to be closely regulated. I do see the similarities...but, if they are being looked at in the same light, I don't see how this merger won't be passed.
>>> I see food as being greatly more important and needs to be closely regulated.
Does the antitrust law discriminate between whether the product is "important" or not? And I'm not sure very much is more closely regulated than communications.
>>> I do see the similarities...but, if they are being looked at in the same light, I don't see how this merger won't be passed.
I think this decision, had it gone the other way, would have been devastating for the pro-merger side. But Mel is asking for far more than the Whole Foods merger was seeking -- so this win isn't a huge one (but a loss would have been huge).
The issue is what comprises "competition" for the specific purpose of anti-trust determination. This is, and always has been, different from what comprises "competition" in the market place. In the market place, cars compete with trucks, motorcycles, even bicycles, to some extent.
In the Staples case it was determined that Walmart was NOT a competitor to Staples and Office Depot (for consumable office supplies), even though essentially the same items were available at Walmart as at Staples -- just as in satellite radio, the "same content" is available elsewhere. But it isn't packaged the same.
While you and others may "feel" it is competition, it should be the law that determines the outcome. It may be that political factors will determine whether suit is even brought or not, I don't know.
whole foods
trader joes
shoprite
A&P
king kullen
waldbaums
Jewel
etc... etc...etc.... etc... etc.... etc....
xm
sirius
It's a go... No doubt in my mind now... Well maybe they will say 50/50 but I'm saying 20/80, in a white wine sauce and scallops...
The judge's decision is not based on the merits of the case, or any particular definition of the organic foods market. Its actually a ruling on a motion for a preliminary injunction that would prevent the merger's consummation pending an administrative hearing before an FTC Star Chamber. The FTC could still go ahead although its much less likely.
I know it's not based on merits. But, I just don't like to think things like food, that you need to survive, can be called comparible to satellite radio, which nobody actually needs to survive. I just don't like it, but as I said I do see the similarities of the case. And, I don't know the entire case work of the Whole Foods merger, but feel it should have a finer comb through it as it is, in my opinion, much much more important of a case. (But I can argue myself in saying that the entertainment industry can be defined by this merger, and what exactly is competition and what's not). Just my thoughts on the two merger comparisons. I know it's a lot more complicated a process.
Whole Foods is kind of like XM and Sirius, except in whole foods you can get an entire sandwich for the price of 1 month of either service.