In the natural foods industry, the merger of two giants Whole Foods and Wild Oats was announced October 2007. A juicy deal of $565 million was sealed. February 2009 the case will be on trial since a third party, the Federal Trade Commission stepped in the conglomeration to invalidate the illegitimate union. The plaintiff in question, Whole Foods launched its crusade : In its ranks an armada of attorneys,? legions of lobbyists using their influence on the Capitol hill.? Confident over its righteous motives Whole Foods is suing the FTC.
By suppressing the existence of its main competitor, Whole Foods will install itself in the comfortable seat of a monopolistic status. With this significative position on the market, it will ensure the company of a sufficient control on a product or service and thus be the only one determining its accessibility. In this economic concentration of power, Whole Foods will capture the lion’s share of a booming market (the organic market makes up nearly 3% of the overall food market). In the lack of competition linked to a monopoly, the price tends to naturally inflate and the democratic face of a liberal economy to tarnish, to smear.
The US competition laws, also called antitrust laws, on the matter are clear. Gates in 2006 in Microsoft v. Commission, paid a consequential price for violating them, conformably to the Sherman and Clayton Acts that regulate any form of abuse.
Roughly summarized, the laws prohibit agreements that restrict free trading and competition, ban abusive behavior by a firm dominating a market (through the pricing tool). The motto “No person shall acquire… to lessen competition, or to create monopoly” is expressed through the RFC’s voice asserting that the consumer welfare and the entrepreneurs’ freedom are at stake in that precise case.
In this punitive intervention, the RFC’s role as a shield against any harmful anti-competitive business practices is to promote consumer protection. So far, by opposing the Whole Foods’ attempt to monopolize the natural foods sector, the FTC guarantees the consumer of its independence and also comfort the consumer with its omnipresence on the market, by monitoring the illegal activities of the economy, as for the actual merger.
When it comes to communicate with its potential customers, Whole Foods encourages the dialogue through twitter. When it comes to give a feedback to a relevant question. Silent is kept. Is it part of the communication strategy to deny information to curious consumers?
When confronted to reality, the company hides behind a wall of silence, pulls the ties of the influence sphere… Doesn’t it say long about the identity of the company? Who would associate themselves to such irresponsible behavior?
A precedence was made with Microsoft, Apple and to their example, Whole Foods will bite the dust and feel the pain of contrevening competition laws.