Ftc Accidently Reveals Whole Foods Trade Secrets: Wal-Mart a Target of Whole Foods Negotiating Strategy

Michael Giberson

Attorneys for the FTC inadvertently revealed Whole Food company trade secrets when they filed documents in court that had been incorrectly redacted. (The background behind the material intended to be redacted was set to black, making it impossible to read the black text, but not hard at all to search or copy and paste the text. Court officials noted the error and replaced the documents with secure versions, but not until after it had been downloaded by some in the public.)

An Associated Press story helps bring the trade secrets to light. Among the disclosures: Whole foods targeted a highly educated customer base, the company expected to close 30 or so Wild Oats stores if the merger goes through, and the opening of a Whole Foods store nearby can cut up to 30 percent out of the revenue of a Wild Oats store. I was most fascinated by the disclosure that Whole Foods negotiated with suppliers in an effort to drive up costs for Wal-Mart. According to the AP:

Whole Foods set “ground rules” barring suppliers from selling directly to Wal-Mart. “It wants Wal-Mart to have to go through distributors because that raises Wal-Mart’s costs,” the document said.

Holy smokes, Batman, did the FTC just inadvertently reveal that Whole Foods imagines it is competing in the same retail products universe as Wal-Mart? Well that certainly opens up the scope of the market just a bit. That clangorous racket you hear in the background is the sound of Herfindahl-Hirschman Index values crashing to the ground.


5 thoughts on “Ftc Accidently Reveals Whole Foods Trade Secrets: Wal-Mart a Target of Whole Foods Negotiating Strategy

  1. Excellent! I feel entirely vindicated for having argued this point from the get-go! Hah!

    If the FTC expert comes up with any market definition other than one that includes Wal-Mart (as well as conventional grocery stores and Trader Joe’s), their analysis is seriously flawed.

  2. Exactly what I thought upon reading this. But I can assure you that the FTC’s market definition most assiduously avoids including Wal-Mart.

    By the way–Thanks to David Boaz for pointing out to me that in my comment to Lynne’s last post on this topic I seemed to claim in the first sentence to be opposed to the merger. What I really meant was that I was (and am) opposed to this merger challenge–not the merger itself.

  3. Exactly what I thought upon reading this. But I can assure you that the FTC’s market definition most assiduously avoids including Wal-Mart.

    By the way–Thanks to David Boaz for pointing out to me that in my comment to Lynne’s last post on this topic I seemed to claim in the first sentence to be opposed to the merger. What I really meant was that I was (and am) opposed to this merger challenge–not the merger itself.

  4. Hey Geoff,

    Thanks to you and David for pointing that out; I’m afraid I’ve been distracted lately (more on that later …) and enough of a spaz that I didn’t follow up properly on your comment, although following your links clarified your position enough!

  5. Hey Geoff,

    Thanks to you and David for pointing that out; I’m afraid I’ve been distracted lately (more on that later …) and enough of a spaz that I didn’t follow up properly on your comment, although following your links clarified your position enough!

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