John Mackey, I want to give you a break, but c'mon...

More online adventures with Whole Foods' CEO John Mackey:

The chief executive of Whole Foods Market Inc. wrote anonymous online attacks against a smaller rival and questioned why anyone would buy its stock, before Whole Foods announced an offer to buy the other company this year.

The postings on Internet financial forums, made under the name "rahodeb," said Boulder-based Wild Oats Markets Inc.'s stock was overpriced. The statements predicted the company would fall into bankruptcy and then be sold after its stock fell below $5 per share.

The company acknowledged that the postings by "rahodeb" were written by CEO John Mackey.

One posting, from January 2005, questioned why anyone would buy shares of Wild Oats at their price then of about $8 each, The Wall Street Journal reported. "Would Whole Foods buy (Wild Oats)? Almost surely not at current prices," rahodeb wrote. "What would they gain? (Their) locations are too small."

Rahodeb also said Wild Oats' management "clearly doesn't know what it is doing." The company, he wrote, "has no value and no future."

I was more or less in sympathy with Mackey's anti-FTC blog rant, but this is awfully silly. I'm curious to know how somebody dug this up, though.

Whole Foods: Slicing up the natural foods market

Via Cafe Hayek, Chicago Tribune columnist Steve Chapman comes out with the same argument Whole Foods CEO John Mackey makes:

Organic food consumers would not be the suffering captives of this new company. Every grocery store has a raft of organic offerings, and chains from Wal-Mart to Trader Joe's are fighting to get their share of sales. If the bigger Whole Foods tries price-gouging, customers can easily find other sources for what they want - from farmers markets to online suppliers.

The key government error is defining the market as a narrow sector isolated from other sectors that provide reasonable substitutes.

Yup. For virtually any company, one can define its market so narrowly that any merger would sharply inhibit competition (FTC's position here), or so broadly that no merger could meaningfully decrease competition (Mackey's position). As a libertarian, I tend to default to the latter position except in cases of genuine -- often government-induced -- monopoly (and its equally mischievous but oft-overlooked cousin, monopsony). I realize there are somewhat persuasive arguments for FTC intervention in markets that, for one reason or another, closely approximate these two conditions, but the booming natural foods industry just doesn't seem like a good candidate.

Unsealed FTC docs reveal Whole Foods' business strategy, provoke blog rant from CEO

Via the Boulder County Business Report:

Whole Foods Chief Executive Officer John Mackey told his board of directors the purpose of buying Wild Oats would be to "eliminate forever" the chance that a mainstream grocer like Kroger or Safeway would launch "a competing national natural/organic food chain to rival us," according to a document revealed today by the Federal Trade Commission.

"Eliminating them means eliminating this threat forever, or almost forever," Mackey said.

Whole Foods had requested that parts of the company's testimony related to its motive for the Wild Oats buyout be blacked out of the injunction order, but the FTC had the documents unsealed. Mackey promises he'll explain why he asked for the testimony to be kept secret on his blog -- more on this soon. Meanwhile, his post today covers his views on what the FTC has done wrong, so far, in their investigation of the merger. Overall, his issues fall into three categories:

1. The FTC are big bullies (evidenced by burdensome requests for info, deadline extensions, and insistence on having access to all company documents).
2. The FTC failed to collect any comparative pricing data before voting against the merger.
3. The FTC wishes to consider competition only within the special category of 'premium natural and organic supermarkets,' rather than among supermarkets generally.

I don't have much to say about 1 and 2, but here's Mackey on this last point:

A big part of the FTC's argument is their belief that Wild Oats and Whole Foods exist in a very narrowly defined category that they call "premium natural and organic food supermarkets". We aren't sure exactly what other companies the FTC believes exist in this narrowly defined category, perhaps only Earth Fare, with about 10 stores all existing in the southern United States. The "premium natural and organic food supermarket" category therefore apparently consists of only three companies-Whole Foods Market, Wild Oats, and Earth Fare.-and of course the FTC apparently believes that if Whole Foods Market acquires Wild Oats then there would only be two companies left in this category.

Is there actually a separate category of "premium natural and organic supermarkets"? Let me state quite clearly up front that there absolutely is! However, that category actually consists of only one company-Whole Foods Market. We created the category and to-date we are the only company that actually belongs in it.

Mackey wants to say that even though Whole Foods looks like the big bad national chain compared to niche stores like Wild Oats, they're actually just a little fish in the big pond of supermarkets. Which is supported by the newly unsealed testimony, but doesn't look so good for Whole Foods -- it seems like Americans love to support the 'little guy,' as long as he doesn't show any signs of wanting to become the big guy.