Whole Foods Gets Its Monopoly

Whole Foods Gets Its Monopoly

In the wake of U.S. District Judge Paul Friedman's decision to allow Whole Foods Markets to buy its next-biggest competitor in the natural-foods business, you have to wonder whether the federal courts can be relied on any longer to enforce the antitrust laws.

After reviewing millions of pages of internal documents, the Federal Trade Commission thought it had a slam-dunk case to block the $565 million merger. According to material inadvertently made public, Whole Foods planned to close 30 Wild Oats stores in markets where the two compete, on the assumption that the local Whole Foods stores could capture 80 to 90 percent of the old Wild Oats customers. Right there was all the evidence Friedman needed to prove that, in the real-world marketplace, traditional grocers still don't compete for customers at these higher-end specialty stores. Instead, the judge appears to have fallen for the familiar plaintiff's ruse that the theoretical possibility of real competition from traditional grocers was sufficient to restrain the new monopolist from raising prices or reducing service.

Unfortunately, we'll never get to fully evaluate Friedman's decision. His 93-page opinion remains under seal to protect the secrecy of other anti-competitive tactics uncovered in the FTC investigation. But in case you had any doubt about Whole Foods' expectations from the merger, consider its code name among company insiders: "Project Gold Mine."

Made in America, Redux?

The real threat to the China trade may not come from a Congress upset about currency manipulation and government subsidies. Instead, it may come from consumers who have begun to question the quality and safety of Chinese-made goods.

Mattel's recall last week of nearly 19 million toys worldwide was merely the latest in a series of product warnings involving cribs, bibs, pet food, tires, jewelry and prescription drugs produced in China. This ought to present a huge opportunity for domestic manufacturers, who can now begin to market made-in-America products on the basis that they not only save American jobs but also save American lives.

The silly idea -- rampant in many industries -- that everything inevitably will be made in China was based on the false premise that price is the only thing that matters to consumers. The sudden interest by companies in demonstrating their "green-ness" has begun to challenge that conventional wisdom. If safety concerns are added to the mix and the dollar continues to fall to where it belongs, we could see the revival of manufacturing industries that had long been given up as lost.

Crack in the Wall Street Cartel

Goldman Sachs made big news last week when it announced that big-deal financiers Hank Greenberg and Eli Broad and others had agreed to invest $1 billion in some of its ailing hedge funds.

But lost in much of the coverage is that the new investors won't have to pay the normal 2 percent annual management fee and will only share 10 percent of the upside with the fund managers in "carried interest."

This concession represents a sea change for the world of high finance, which for decades has fought the general tide and managed to avoid competing on the basis of price. We can only hope that, in the coming downturn in the financial sector, other hedge funds, investment banks and private-equity firms will be forced to follow Goldman's lead.