Whole Foods, the natural foods chain, in 2007 acquired its chief competitor, Wild Oats Market. Whole Foods had about 12 percent of the natural foods market, and Wild Oats held about 3 percent. Whole Foods had 197 stores and added 110 by purchasing Wild Oats. About 72 percent of Wild Oats’ sales were in markets where the two overlapped. Whole Foods argued that the merger was necessary to allow it to compete effectively with big chains such as Safeway and Walmart.
Prior to the purchase, Whole Foods cofounder and CEO John Mackey allegedly said that the proposed merger would end “forever or almost forever” the possibility of a big grocery chain buying an existing natural foods chain to compete with Whole Foods. Mackey also allegedly said that buying Wild Oats would prevent “nasty price wars.”
The Federal Trade Commission challenged the Whole Foods purchase of Wild Oats.
a. What was the primary issue facing the federal courts that reviewed the FTC challenge?
b. Decide the case. Explain.