Maybe the people who work for the Federal Trade Commission just don't get out much. Or maybe the FTC is headquartered on another planet, and intelligence dispatches to the Planet Xenon about Earth's retail universe are catching some static in transmission.

How else can you explain the agency's plan to try to block Whole Foods Market's (NASDAQ:WFMI) proposed merger of Wild Oats (NASDAQ:OATS)?

Is Whole Foods, a provider of what not long ago were considered niche organic products, a monopoly in the making? The FTC apparently fears that if Whole Foods acquires Wild Oats, consumers will have nowhere else to go for organic products -- or, I don't know, maybe even for food.

Um, hello ...

No choices?
Apparently, the FTC hasn't noticed the vast options through which consumers can purchase organic merchandise these days. If I have a desire for organic products (or gourmet products, in some cases), I can find a pretty good selection, at various price ranges, in the following places in my part of the world.

  • Whole Foods Market
  • Wal-Mart (NYSE:WMT), Safeway, Giant, and Harris Teeter supermarkets
  • Organic and gourmet retailer Trader Joe's
  • Independent crunchy-granola Mom-and-Pop shops
  • Roadside stands and farmers' markets, if you're looking to buy local. I'm growing tomatoes and cucumbers myself this year, so some of my produce will come out of my own "garden." (Geez, Whole Foods doesn't even mind, really -- not only does it try to support local farmers, but also in my local store, one of the tips it offers for reducing one's carbon-dioxide footprint is to grow one's own veggies. What insidious evil!)

I'm sure you can find similar options in your own neighborhood.

Meanwhile, Whole Foods and Wild Oats aren't known for delving into rural areas with less competition. They generally enter into urban and suburban settings with more affluent consumers who are more likely to be interested in all of the trappings of the organic lifestyle. And don't even get me started on pointing out that some of the demographic that's most interested in organics will ultimately opt for the indie stores and local farmers anyway, since many of them aren't exactly pro-corporate.

Who's monopolistic, again?
If the Whole Foods-Wild Oats hookup is anticompetitive, then you can easily take potshots at other situations in retail and even other industries. For example, what about the small towns in rural America where critics charge that Wal-Mart has virtually wiped out the competition?

The FTC supposedly seeks to keep competition healthy so that consumers will have a range of services to choose from, and that's the FTC's stance in this case -- that Whole Foods seeks to acquire its closest competitor in organics. However, in the Wal-Mart example, many rural towns truly don't have many options, since Wal-Mart's everyday low prices drove out rivals and became the only game in town. Meanwhile, as I've noted, consumers can still shop in many places for organic goods.

Even the argument that a combined Whole Foods/Wild Oats might be tough on suppliers falls a little flat, since Wal-Mart is notorious in that area as well. Because Wal-Mart is so big and commands such a large percentage of transactions in the U.S., many of Wal-Mart's suppliers -- including extremely powerful ones -- have had no choice but to comply with Wal-Mart's demands. They end up playing ball with Wal-Mart even if it's often hardball.

What about satellite radio? If a Whole Foods-Wild Oats merger would result in limited choices for consumers, then XM Satellite Radio (NASDAQ:XMSR) and Sirius Satellite Radio (NASDAQ:SIRI) certainly shouldn't be able to join forces, despite the fact that people can and do get music from plenty of other sources.

And for those who speculated that Borders (NYSE:BGP) and Barnes & Noble (NYSE:BKS) might merge, this precedent makes me think the FTC would push back on that one, too, even though online retail and other options have put the screws on booksellers.

(I had these thoughts last night, but apparently the satellite radio and bookseller examples came to many people's minds, judging by the news coverage and by Goldman Sachs' cut on Borders to "sell" this morning.)

The truth is out there
In last quarter's conference call, Whole Foods CEO John Mackey declined to talk in much detail about rumblings that the FTC might seek to block the Wild Oats acquisition. He did say there might be some politics going on, although he also said Whole Foods management didn't know what the FTC's reasoning might be or who might have "objected" to the deal.  

Maybe it's time to let loose with the conspiracy theories. It makes one wonder what interests might have lobbied against this deal. Are conventional grocers running scared, for whatever reason? A Foolish reader recently emailed me wondering whether unions might be agitating over the proposed deal, since Whole Foods is well known to be anti-union. (Wal-Mart's also had its share of criticism for its anti-union tactics, but I've already discussed how Wal-Mart's an awfully powerful opponent.)

Many people are divided on Whole Foods' prospects. I am a shareholder and happen to think it's a great company -- and investment -- for the long term. David Gardner recommended it for Motley Fool Stock Advisor. And I know quite a few other shareholders right here at Fool HQ. On the other hand, plenty of my Foolish colleagues have also been bearish on the stock. But whichever side of the fence you're on, it's hard to argue that the FTC's plan to block this deal seems plenty bizarre in the grand scheme of things.

Whole Foods and Wild Oats have said they will fight the FTC's plan. In Whole Foods' Form 8-K on the situation, Mackey said:

We are very disappointed by this decision and we intend to vigorously challenge the FTC in court. The FTC has failed to recognize the robust competition in the supermarket industry, which has grown more intense as competitors increase their offerings of natural, organic and fresh products, renovate their stores and open stores with new banners and formats resembling Whole Foods Market. Evidently the FTC does not appreciate the many benefits for consumers of the proposed merger, including our plan to invest capital in and improve many of the stores currently owned by Wild Oats.

I suppose we can't know exactly why the FTC would choose to pick on this particular deal, but given the reality of the situation, doesn't it look as though the FTC has either been influenced or else has little clue as to what really constitutes anticompetitive behavior on the retail landscape?

The FTC likes to emphasize that its moves are good for consumers, but if this plan is good for somebody, I'd like to know exactly who it is -- I'm not sure it's you, me, or the organic consumer.   

For related Foolishness, see the following articles:

Whole Foods Market is a Motley Fool Stock Advisor recommendation. Wal-Mart and Borders are Motley Fool Inside Value recommendations. You can try out either service free for 30 days.

Alyce Lomax owns shares of Whole Foods Market. The Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.