Editorial: Whole hog for Whole Foods

Monday, Aug. 27, 2007 | 7:12 a.m.

Thirty years after the market for organic foods began evolving as a backlash against agribusiness and its heavy use of fertilizers and "factory farming" treatment of livestock, two companies have emerged as national competitors - Whole Foods and Wild Oats.

As organic meats, vegetables and fruits, and the products made from them, are more expensive than conventionally prepared foods sold in regular grocery stores, competition in this niche market of the food industry has been good for consumers.

But a February announcement by Whole Foods that it was planning to buy Wild Oats threatened to put an end to this healthy competition.

The national organic market - promoted with images of grassy fields and promises that its eggs come from "free range" chickens and that its meats come from humane farms and ranches where animals eat natural foods and are spared injections of production-enhancing chemicals - was posturing to become a near-monopoly.

Well, this isn't 1890 or 1914, when the Sherman and Clayton antitrust acts were passed to prevent companies from buying each other for the purpose of dominating a market. This is the age of mergers and has been for decades.

Yet a glimmer of hope for continued competition shone in June, when the Federal Trade Commission filed suit in federal court to block the buyout.

The FTC disputed Whole Foods' claim that regular grocery stores stock organic items and therefore represented competition. In its suit it stated matter-of-factly: "Whole Foods and Wild Oats target very different customers than do other retailers."

The FTC, at times using direct quotes from Whole Foods Chief Executive John Mackey, argued that the proposed purchase of Wild Oats was motivated entirely by the desire to eliminate competition.

We think the FTC should have prevailed in its suit. It would have given the old notion that competition is good for a free market at least some oxygen in a merger-mad country.

But on Thursday the U.S. Court of Appeals in Washington, D.C., bought the argument that traditional grocery stores represent competition in the organic market. It threw out the FTC suit, setting the stage for Whole Foods to go ahead with its plan.

Locally, Austin, Texas-based Whole Foods operates stores in Las Vegas and Henderson, as does Boulder, Colo.-based Wild Oats. To borrow a poker phrase, given the card that Whole Foods has been dealt, we think the price of organic food just went up.

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