Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, June 6, 2007

Supermarkets and Competition

Posted by D. Daniel Sokol

Today's Wall Street Journal has an interesting article on how traditional supermarkets have responded to the competitive pressures of low cost retailers (Wal-Mart).  It is an interesting read.  Wal-Mart has not been the only threat to traditional supermarkets.  There are also high end threats from the likes of Whole Foods and Wild Oats.  On this issue, the FTC has decided to try to block the merger of Whole Foods and Wild Oats.  I had assumed that this deal would not have been challenged and that the merged firm would have had to make some divestitures where there was an overlap in certain markets.  Econometric data will be key in determining the case-- think back to Staples/Office Depot, although I think that this case is a bit different.  Nevertheless, the new case should be an interesting one.  The big question here is in the market definition-- is it based on supermarkets overall (and what does "supermarkets" include) versus a more specialized market for yuppie organic foods of which we are moving from two players to only one.  This is not your traditional supermarket case (unlike the A&P and Pathmark merger).  I am a bit skeptical on anti-competitive effects on this merger because I tend to think that there may not be a separate organic market.  The econometric data will help us to determine if the FTC story is the correct one.  This FTC challenge comes in the wake of a recent FTC conference on supermarkets on May 24.

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