Washington – Whole Foods chief executive John Mackey’s statement that taking over Boulder-based Wild Oats would eliminate “nasty price wars” shows a merger of the companies would harm consumers, a government lawyer argued Wednesday.
During the final day of a trial to decide whether the $670 million deal should proceed, Federal Trade Commission attorney Michael Bloom said Mackey’s remark reveals Austin, Texas- based Whole Foods’ desire to dominate the market.
“Nasty price wars are nasty to Mr. Mackey,” Bloom said. “But they are not nasty to consumers.”
U.S. District Judge Paul L. Friedman will decide whether to grant the FTC’s request to bar the merger. He is expected to issue his decision by Aug. 15, when he leaves for vacation.
Mackey figured prominently in the FTC’s closing argument and also appeared in the argument of Whole Foods lawyer Paul Denis.
Denis described Mackey’s statements as “provocative” but meaningless. Denis played several clips of Mackey speaking at his videotaped deposition, in which Mackey said all mergers eliminate competition.
But “Mr. Mackey is not a lawyer,” Denis said, and the legal definition for lessened competition is a sustained price increase.
Mackey never said he intended to raise prices, there are no Whole Foods documents showing it plans to raise prices, and the FTC hasn’t produced any proof that prices would increase, Denis said.
“The issue really comes down to price,” he said.
In fact, he argued, consumers could see prices fall under the deal because Wild Oats’ prices are higher than those of Whole Foods.
Instead of offering evidence that prices would rise, Denis said, the FTC invented a category of “premium natural organic supermarkets,” one he said the industry doesn’t recognize.
Whole Foods documents, Denis said, show that Whole Foods spends its resources monitoring the prices and behavior of the supermarkets it considers competitors, including Safeway, Kroger and Wal-Mart.
Friedman asked how widely Whole Foods checked competitors’ prices and whether the company can’t check prices on many items it sells because other supermarkets don’t offer them.
Other supermarkets increasingly stock organics, Denis said. In fact, he added, Broomfield-based organic-milk seller White Wave submitted a statement to the court saying Wal- Mart buys three times as much of White Wave’s products as Whole Foods and Wild Oats combined.
The FTC cited as evidence that the two companies are competitors Mackey’s statements about wanting to “crush” Wild Oats when that chain announced plans to open a flagship store in Boulder.
Whole Foods and Wild Oats are unique competitors, Bloom said, because they are among the few that cater to customers looking for more than organic foods. Those customers want environmentally safe products, for example, he said, and wouldn’t want to see traditional laundry detergent in their grocery store.
Staff writer Anne C. Mulkern can be reached at 202-662-8907 or amulkern@denverpost.com.
