Final answer:
Whole Foods' competitors include not just other premium organic chains, but also traditional supermarkets that offer natural and organic products. The FTC's decision to block and then conditionally allow the merger between Whole Foods and Wild Oats underscores the complexity of market definitions and the focus on competition rather than market share.
Step-by-step explanation:
The competitors of Whole Foods include other companies in the premium natural and organic supermarket chains market, as well as a broader array of businesses that sell groceries or specialty food items, encompassing traditional supermarkets. In a strategic move, Whole Foods Market attempted to merge with Wild Oats Market in February 2007, both being dominant players in the natural and organic segment. But, traditional supermarkets also tend to offer natural and organic products, making them competitors as well.
The Federal Trade Commission (FTC), tasked with ensuring fair competition, chose to focus on actual competition rather than market share alone to evaluate the attempted merger. They conducted an extensive assessment of profits and prices across different cities and competitive scenarios. The FTC initially blocked the merger due to concerns over competition in local markets but eventually allowed it in 2009 with specific conditions, including the divestiture of the Wild Oats brand and certain stores.
This case illustrates the complexities involved in defining markets and the importance of considering various factors beyond market share when evaluating potential anti-competitive behaviors in the supermarket industry.