It Depends On What Your Definition of 'Market' Is

I've been following the proposed XM-Sirius merger with much interest, and Friday's news about the Whole Foods-Wild Oats merger folds into that nicely. 

"Judge OKs Whole Foods-Wild Oats Merger"

And as a result...

"Whole Foods Decision Could Boost Other Deals"

"The decision is a 'modest positive' to two other planned combinations -- Sirius' takeover of XM Satellite; and Google's acquisition of digital advertising firm DoubleClick -- wrote Blair Levin, analyst at Stifel Nicolaus and former Federal Communications Commission official, in a research note published on Friday and obtained by Reuters.

It gives the companies 'new legal ammo to argue for defining their relevant markets broadly, which could reduce antitrust concerns about potential anti-competitive effects,' Levin wrote. 'At a minimum, it gives the reviewing agencies some food for thought,' he added in the note."

Or you may be of the opinion, like Douglas McIntyre of Blogging Stocks, of...

"The Fiction of Whole Foods Helping Other Mergers"

I don't agree with McIntyre because I believe he defines the market too narrowly. XM and Sirius are, as he points out, the only to satellite radio companies. But they operate in a very broad entertainment and recorded music industry. They compete with terrestrial radio and in the coming years will definitely come into greater competition from Internet radio as it becomes untethered from personal computers.

The Washington Post's Steven Pearlstein certainly defines markets as narrowly as possible. "Whole Foods Gets Its Monopoly" claims the title of his post yesterday. He will say there is evidence that traditional grocers do not compete for shoppers of high-end grocery stores, but that seems really flimsy to me. Can a market -- and therefore a monopoly -- be so narrowly defined as to include only a sliver, a niche of a larger market? What about the thousands of farmers' markets around the country? What about the organic food products carried by grocers large and small?

There are so many places to get healthy, organic food in Manhattan that I didn't come close to stepping inside a Whole Foods over the summer. Whole Foods may have a lock on the narrowly defined market of well known national chains that carry high-end organic food and give a share of its profits to non-profit organizations, but that's a very small part of the overall grocery market, and many people have enough high-end options never to shop at Whole Foods.