FTC v. Wild Oats

Here is the link to the PDF file that outlines the Federal Trade Commission case against the Whole Foods-Wild Oats merger.

From the complaint for a temporary restraining order (that was granted). Some of the file is redacted.
From the FTC complaint:


This merger, involving the two leading operators of premium natural and organic supermarkets, will increase prices and reduce quality and services in a number of geographic markets throughout the United States. Consumers spent a combined total of $6.5 billion in fiscal 2006 at Whole Foods and Wild Oats.

On February 21, 2007, Whole Foods and Wild Oats executed an agreement whereby Whole Foods proposes to acquire all of the voting securities of Wild Oats through WFMI Merger Co., a wholly-owned subsidiary of Whole Foods. The purchase will be effected through tender offer for all shares of Wild Oats common stock. The total cost of the acquisition is expected to be approximately $671 million in cash and assumed debt. The closing of the transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, 15 U.S.C. § 18a. The defendants have advised the Commission that, in the absence of a court order to the contrary, Defendant Whole Foods will be free to acquire all shares of Wild Oats common stock after 11:59 pm June 6, 2007. Defendant Whole Foods intends to then merge Wild Oats into Whole Foods; to close Wild Oats stores; and to operate the remainder as Whole Foods stores.
On June 5, 2007, following a three-month investigation, the Commission determined that it has reason to believe that the Acquisition would violate Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act because the Acquisition may substantially lessen competition and/or tend to create a monopoly in the operation of premium natural and organic supermarkets across the United States.

TK: It seems a stretch to believe that Whole Foods' acquisition of Wild Oats would cause a "monopoly" in the operation of premium natural and organic supermarkets. At least, the resulting monopoly would likely be short-lived.

FVIAC - Leafy Greens discussion

At the June 4 Fruit and Vegetable Industry Advisory Committee, Matt McInerney of Western Growers leads off this discussion of the leafy greens marketing agreement;the legal counsel of CDFA also adds his remarks in this audio link.

Changes to leafy greens agreement

Here is coverage that details changes in the California leafy greens marketing agreement. From the Monterey County Herald:

The California Leafy Green Handler Marketing board, meeting at the Richard Nutter Agriculture Center in Salinas, approved changes to clarify the way state inspectors audit participating growers and handlers process their produce. Under the agreement, participating handlers — including everyone who touches the produce on its way from fields to stores — voluntarily follow a list of safety procedures that earn their products the state's seal of approval. Handlers pay for the cost of the auditing program, which is administered by the state Food and Agriculture Department, and only buy produce from growers who follow similarly strict procedures. Though voluntary, the agreement has been signed by nearly all of the leafy greens processors, rendering the guidelines nearly mandatory. There are 111 signatories to the agreement, including 49 in Monterey County. Bob Martin, general manager of Rio Farms in King City and a member of the marketing group's technical advisory committee, said the changes will clear up confusion and miscommunication that occurred immediately after the agreement was implemented in April. The state approved the original agreement in February.
Meanwhile, the state Senate earlier this week approved three bills authored by Sen. Dean Florez, D-Shafter, aimed at preventing E. coli outbreaks. Despite heavy opposition from agricultural industry groups, the bills advance to the Assembly. Florez is among the critics who believe the industry must take a more stringent approach toward produce safety than the voluntary program.

TK: There was some talk about the marketing agreement at the June 4 Fruit and Vegetable Industry Advisory Committee. There evidently is some consideration whether the "seal of approval" should be consumer focused or trade focused. Having the seal on packages from California but not on packages from Arizona or other states, for example, might confuse consumers.

More ink on Tesco

Here is coverage from the UK Telegraph on Tesco market entry into the U.S. Very good feature. Here are some highlights:

Tesco's decision to open small convenience stores is bold and, on initial impressions, counter-intuitive. After all, American retailers such as Wal-Mart invented the so-called "big box" pile-it-high-sell-it-cheap retail format upon which Tesco has based its own hugely successful business model at home. That Tesco has shunned this style of doing business in the backyard of its innovators speaks volumes about the way it operates and its appetite for calculated risks.

TK: It would seem Tesco wants shoppers to shop several times per week, but the latest FMI statistics show that U.S. shoppers now go to the supermarket less than 2 times per week. Tesco's foray is truly counter-intuitive and depends wholly on their execution.

More from the story:

Mason believes that Tesco has found an untapped market with Fresh & Easy. The US's west coast is huge and under-served by food stores. California is the country's most populous state with 35m people, equivalent to half the population of the UK. Meanwhile Phoenix and Las Vegas are the fastest growing cities in the US.
More importantly though, "convenience" retailing as we know it in the UK - a small shop selling a wide range of fresh, top-up groceries - does not exist in the US, where a convenience store means a petrol station selling cigarettes, doughnuts and little else

TK: Wait just a sec; don't forget about the brown bananas and the red delicious apples now on display....


In offering a new type of store, Tesco is neatly circumventing competing head-on with the likes of Wal-Mart. Indeed, the whole image that Fresh & Easy intends to project is a world away from the stereo-typical image of the US supermarket as a vast midwest hanger full of shoppers with elasticated waistbands.

TK: The Telegraph takes a shot at the Midwest. We won't forget it.

Its greatest competitors will be smaller chains such as Trader Joe's, which is owned by Germany's Albrecht family, the Aldi owner; and Whole Foods Market, the health food store that opened its first UK branch on London's Kensington High Street last week.
Tesco also has a team of 10 food technicians in the US, helping suppliers develop produce for it. This "collaborative" way of doing business is huge in the UK grocery sector but simply does not exist in the US.

TK: We here in the Midwest with the elasticized waistbands won't see Tesco for a while, but I think the whole world would be shocked if Tesco doesn't experience some serious U.S. growth in the next 15 years.

COOL is back

The Chicago Tribune reports that the country of origin labeling is back from oblivion. When I was at the fruit and vegetable industry advisory committee, one supplier joked that they will start getting nasty grams from retailers again about the issue. From the June 10 story:

Some say recent food scares have made the labeling an idea whose time has come, and bills in the House and Senate propose making it effective as early as this September."There will be mandatory COOL by 2008 at the latest," said Rep. Rosa DeLauro (D-Conn.). "I believe that this is the direction we're moving in. This is about consumers and their ability to make marketplace decisions."

TK: One shipper told me that a retailer asked him to write letters to their members of Congress to express (the shipper's) opposition - and the retailers wanted to be copied on those letters. Can the industry put forward a credible voluntary country of origin law with mandatory triggers? Despite the worry about the cost and the broad opposition to mandatory COOL, a voluntary plan with mandatory triggers might be the only chance opponents of COOL have at this point.

FVIAC - AMS Food Safety Services

Here is the audio link to the presentation made by Kathy Staley, Senior Advisor for Quality Management, Fresh Products Branch, Fruit and Vegetable Programs, USDA Agricultural Marketing Service to the fruit and vegetable industry advisory committee. The USDA is actively seeking to expand its services in respect to food safety, and there are proposed elements to the next farm bill that would explicitly include food safety in the realm of AMS services to the industry through marketing agreements and marketing orders.

FVIAC - Food Stamp presentation

The link to the USDA page with slide presentations from the June 4-5 Fruit and Vegetable Industry Advisory Committee is found here. When I was at the site this morning, however, there appeared to be a few broken links among the various slide presentations.

Here is the audio link to Clarence Carter, Deputy Administrator, Food Stamp Program, USDA Food and Nutrition Service. He talks some about the parameters of the program, how the program will likely be renamed, the rate of participation among eligible citizens (California is lowest with only 56% of those eligible participating), rejects the idea that food stamp participants are more prone to obesity and discusses the feasibility of trying to conform food stamp purchases to the national dietary guidelines.

Ethanol primer

A good recap of the ethanol debate is found in this wire service story. From the story:

If the current tax credits, grants and loan guarantees are extended, the package would cost taxpayers an additional $140 billion over the next 15 years. New proposals under consideration in Congress could raise the tab to $205 billion. either the White House nor Congress has spelled out how they plan to square the costs with other budget priorities. Paying for the incentive programs, which are supported by a bipartisan coalition of lawmakers, could clash with keeping the federal budget deficit under control. Democrats have vowed to abide by so-called pay-as-go rules -- offsetting new programs with spending cuts or new tax revenues.

TK: We'll see if the pay-go principle applies to ethanol the same as it applies to specialty crop block grants. Paying for the extension of an existing 51-cent-a-gallon ethanol tax credit, scheduled to expire in 2010, would cost the government $131 billion through 2022. President Bush has suggested the threshold of 35 billion gallons of alternative fuel by 2017, and Sen. Tom Harkin is backing a plan for 60 billion gallons by 2030. What's more, the celebrated use of cellulosic ethanol is an unproven technology would require heavy subsidies as well. The House Ways and Means Committee and the Senate Finance Committee haven't yet put paper to pencil and figured out how the treasury is going to pay for this ambitious plans.

Canada rattles the chain

From a government Web site, here are details about the news that Canada has requested a WTO panel on U.S. agricultural subsidies. Under WTO rules, the U.S. can provide up to $19.1 billion in trade distorting subsidies a year. Canada believes that the U.S. has exceeded its limits on trade distorting agricultural subsidies in 1999, 2000, 2001, 2002, 2004 and 2005.
From the Canadian site:

On January 8, 2007, Canada requested consultations with the U.S. on this matter. Eight other WTO members (the European Union, Australia, Brazil, Argentina, Nicaragua, Guatemala, Uruguay and Thailand) joined the consultations as third parties. The WTO consultations, held on February 7, 2007, did not resolve the issue.


Canada isn't finished yet.

Canada raised concerns that U.S. corn subsidies were causing, or threatening to cause, serious prejudice to Canadian corn growers by significantly suppressing Canadian prices. Canada has chosen not to include this element in the current request for a WTO Panel. However, our case on Total AMS includes the same programs, and the subsidies paid out to U.S. corn farmers under these programs, that were at issue in the WTO consultations on serious prejudice. Canada retains the right to seek a WTO panel on serious prejudice on corn at a later date.


TK: This news should add to the drama of the House Agriculture Committee's work on the farm program in upcoming days and weeks. At least the fruit and vegetable industry doesn't have to worry about the WTO stripping away billions in subsidies, since they had none to start with.