"Court documents released Tuesday, June 19, capture Whole Foods Market Inc.'s CEO John Mackey urging his board to snap up rival Wild Oats Markets Inc. to eliminate any threat from a rival natural foods company.... The FTC's complaint states that 'Mackey bluntly advised his board of directors of the purpose of this acquisition: 'By buying [Wild Oats] we will … avoid nasty price wars...."Uh, oh. This one is not going to make the deal easier to defend. But it may not be a deal breaker yet either. Of course, price wars will be eliminated (and prices will likely rise--this idea that market power reduces price competition is fairly well established (see Pragar and Hannan 1998), BUT it does not mean there is not enough competition for Whole Foods and Wild Oats to be merged. Stay tuned.
BTW speaking of horizontal mergers and the difficulty of being approved, XM and Sirius were back in the news recently. Another one that I would have let go.