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    Published on: December 19, 2008

    The battle between Whole Foods and the Federal Trade Commission (FTC) continues to have reverberations on Capitol Hill, as the bipartisan leaders of the House Judiciary Committee reportedly have sent a letter to the FTC expressing concerns about the dual systems of justice for merger enforcement between the FTC and Department of Justice.

    At issue is the FTC’s continuing efforts to unravel the $565 million acquisition of Wild Oats by Whole Foods, which was completed a year ago.

    An attorney representing Whole Foods in the case tells MNB that John Conyers, Jr. (D-MI), Chairman of the House Judiciary Committee, and Lamar Smith (R-TX), the Ranking Member, sent a letter to William E. Kovacic, the Chairman of the FTC, expressing concerns over a “disparity that may have evolved in the procedures used by the two federal antitrust enforcement agencies, the Federal Trade Commission and the Antitrust Division of the Department of Justice, for reviewing mergers under Section 7 of the Clayton Act.”

    The letter reportedly identifies disparate treatment between the Department of Justice and the FTC, the federal agencies charged with antitrust enforcement, stating: “The Antitrust Division, as a law enforcement agency, brings all of its challenges in federal court, while the FTC, as an independent agency, has additional administrative authority. In the merger area, however, concerns have been raised that this disparity may in some instances lead to differences in the treatment of merging parties, not only procedurally, but substantively as well.”

    The letter follows a similar letter written last week by eight US Senators and sent to the FTC, raising similar questions about treatment of Whole Foods by the FTC.

    Lanny Davis, lead attorney for Whole Foods Market, said yesterday that "Whole Foods has not asked Members of Congress to take sides in any ongoing litigation. We're not going to comment specifically on this letter except to say that we share the concerns of Chairman Conyers and Congressman Smith, as expressed in the letter."

    KC's View:
    It is a shame that time has to be wasted on this issue, but unless the new administration forces changes upon the FTC, both houses of Congress ought to hold hearings that hold the FTC’s feet to the fire. Roast ‘em.

    Published on: December 19, 2008

    The Chicago Tribune reports this morning that hot on the heels of a report that the one Walmart in Chicago has generated more than $10 million in sales tax revenue over the past two years, there is evidence that the retailer will revive its efforts to open at least one more store there.

    "We've shown ourselves to be a very viable business and a relevant one in the face of some pretty tough developments in the economy," John Bisio, director of public affairs for Wal-Mart in Chicago, tells the Tribune. "I would guess as we come out of the holidays, we would want to have that kind of conversation [with the city]."

    "We're always open to talk to them about other opportunities,” says Pete Scales, spokesman for the city's Planning Department.

    Walmart’s expansion efforts in Chicago have been stymied by concerns that its stores could put smaller retailers out of business, as well as by objections from the city’s large active and vocal organized labor movement.

    KC's View:
    Add to this equation the fact that Walmart is one of the few retailers actually growing sales during a recession, and I’m not sure what the logic is in keeping the retailer outside the city limits.

    Published on: December 19, 2008

    Bloomberg reports that in the UK, Tesco, Walmart’s Asda group and Sainsbury have pledged to cut by 50 percent the number of disposable plastic shopping bags that they hand out to shoppers. The pledge came as part of an environmental agreement with the national government.

    “This is a bold commitment which will result in around 5 billion fewer bags being handed out,” Environment Minister Jane Kennedy said in a prepared statement. “We can all play our part to reduce the number of carrier bags on our high streets.”

    According to the Bloomberg story, “Retailers have already been reducing the use of disposable bags by a variety of methods. Marks and Spencer on May 6 started charging 5 pence (8 U.S. cents) for each plastic bag used by customers when buying food. Tesco awards so-called Green Clubcard Points to customers who bring in their own bags. Those points can then be redeemed for goods sold in the store.”

    The story also notes that a national commitment comes after moves by more than 120 towns and villages – “from Cornwall to Scotland” – to reduce plastic bag usage as a way of cutting down on the bags’ environmental impact.

    KC's View:
    The beat goes on…like it or not, the era of the disposable plastic bag is drawing to a close. Maybe not today, maybe not tomorrow, but soon…

    I prefer a shift that takes place because people are given incentives to use canvas and other kinds of reusable bags, rather than because of fines, fee and legislation. But however we get rid of these things works for me.

    Published on: December 19, 2008

    Retail Week in the UK reports that Tesco plans to expand its Discounter line from 350 to 550, including SKUs such as soda, juice, potato chips and other snacks. The line originally was developed to combat aggressive marketing by hard discounters such as Aldi and Lidl.
    KC's View:

    Published on: December 19, 2008

    The Wall Street Journal this morning reports that MillerCoors has forged an agreement with more than a dozen state Attorneys General to stop selling alcoholic drinks juiced up with caffeine.

    According to the story, “The beer giant had come under fire from the states as well as several consumer-advocacy groups, for allegedly marketing its top-selling Sparks brand so that it appealed to underage consumers. Critics also complained that the drinks raised potential health risks by masking feelings of drunkenness … MillerCoors, a joint venture of SABMiller PLC and Molson Coors Brewing Co., agreed to remove caffeine, taurine, guarana and ginseng from Sparks.”

    KC's View:

    Published on: December 19, 2008

    • Kraft Foods, Nestlé and Procter & Gamble, along with Germany-based retailer Metro Group, announced that they have extended the use of the Global Data Synchronization Network to synchronize item data in Russia. Kraft, Nestlé and P&G reportedly intend to synchronize their product catalogues in multiple countries with Metro Group representation, and expect to realize supply-chain benefits such as reduced paperwork and strengthened service levels thanks to faster setup of new items and more-accurate product data.

    According to the announcement, “Enabling active GDSN connections in Russia is a milestone for the data-synchronization industry given Russia’s dynamic market conditions. As one of the fastest-growing European markets, Russia offers a significant potential for suppliers and retailers to grow across all sectors. This GDSN connection provides a faster and more cost-effective flow of information and goods in a country where electronic master data exchange is still in the initial stage.”

    • Nash Finch yesterday announced that it will acquire for $80 million three distribution centers from GSC Enterprises. The facilities are located in Florida, Kansas and Texas, and largely service military commissaries and exchanges.

    • The Milwaukee Journal Sentinel reports that Fresh Brands plans to change its name to Piggly Wiggly Midwest as of January 4, saying that connecting the company name to the business name makes sense for long-term growth and recognition. The company is not affiliated with C&S Wholesale Grocers, which owns the original Piggy Wiggly company and name.

    KC's View:

    Published on: December 19, 2008

    • Sara Lee Corp. announced yesterday the retirement of its CFO, L.M. "Theo" de Kool, effective June 2009. A search has been launched for his successor.

    KC's View:

    Published on: December 19, 2008

    • Stater Bros. announced yesterday that its fiscal 2008 sales were $3.74 billion, up 1.8 percent over the previous fiscal year, with annual net income of $40.6 million.

    Q4 sales at Stater Bros. were $940.2 million, compared to $993.8 million during the same period a year ago. Q4 net income was $7.2 million, compared to $10.4 million during the same period a year ago.

    • Rite Aid said yesterday that its third quarter sales fell to $6.47 billion from $6.5 billion, on same-store sales that were up 1.4 percent. Q3 losses were $243.1 million, compared to a loss of $84.8 million during the same period a year ago.

    KC's View:

    Published on: December 19, 2008

    • W. Mark Felt, the former second-in-command at the Federal Bureau of Investigation (FBI) who revealed three years ago that he was the anonymous source called “Deep Throat” who provided Washington Post reporters Bob Woodward and Carl Bernstein with Watergate scandal-related information that helped bring down the Nixon administration, died yesterday at age 95.

    • Majel Barrett-Roddenberry, the widow of “Star Trek” creator Gene Roddenberry, died yesterday of leukemia. She was 76.

    Barrett-Roddenberry appeared in the very first pilot for the original “Star Trek,” (which featured Jeffrey Hunter playing Capt. Christopher Pike), playing an unemotional first officer called “Number One.” The character was eliminated from the series’ second pilot (which starred William Shatner as Capt. James T. Kirk) because network honchos felt that audiences in the sixties would not accept a woman in such a power position. (The unemotional aspects of the character were then assigned to a character called Spock, and the “Number One” assignation was used in “Star Trek: The Next Generation” as a nickname for Commander William Riker’s.)

    This didn’t end Barrett-Roddenberry’s involvement with “Star Trek.” She played Nurse Christine Chapel in the original series, played Counselor Deanna Troi’s mother on “The Next Generation” and on ‘Star Trek: Deep Space Nine,” and gave voice to the ship’s computer on almost all the recent iterations of the show.

    And, according to reports, she only recently finished providing the computer voice for the new version of ‘Star Trek,” starring a group of young actors playing Kirk, Spock, McCoy in their early days, which is scheduled to hit theaters next May.

    KC's View:

    Published on: December 19, 2008

    MNB posted an email yesterday from an MNB user who is an independent liquor store owner in New York State, and who objected to my feeling that a decision by the state to allow wine sales in supermarkets would be a good thing. I disagreed with him, pointing out that what he really wanted was a protected monopoly…and that if he wanted to be competitive, he’d actually have to compete.

    MNB user Ken Wagar responded:

    While I believe your response to Mr. Klump was accurate I did find it more than a bit insensitive. This fellow may well lose his livelihood after working hard for many years to build a successful business and he may lose that livelihood through no fault of his own. That is not to say that he should be protected or that the change shouldn’t take place but it seems to me we should have some compassion for someone who may find himself in a very tough job market in the midst of our biggest economic downturn since the great depression. More or less telling him “tough, that’s life” may be true but is neither helpful nor sensitive.

    I don’t disagree with what you said but do believe you could have found a better way to say it.


    I didn’t mean to be insensitive. But it seems to me that what he needs is tough love…and that he’d better start now if he wants to compete with supermarkets in the wine category.




    Lots of reaction to my MNB Radio rant this week about the loss of trust in both public and private institutions, and the abundance of cynicism that seems to exist today.

    MNB user Christine A. Myres wrote:

    As an unrepentant optimist who fights the urge to be cynical on a daily basis, I think we might emulate this years’ voters and try to change some of these things from the bottom up, since some of our ‘leaders/people with power’ seem to be so unreliable, untrustworthy and morally bankrupt. Apparently just shrugging our shoulders and saying ‘what next?” doesn’t elicit the response we want, is it true you get what you expect? In that case, we should expect better …

    Another MNB user wrote:

    Well said. The Boomers have changed American POP Culture at every life stage; have changed how America thinks about almost everything. Our impact is hard not to feel daily. We started our journey with such high expectations – a dream that has become a nightmare. I for one will never stop fighting for the dream. My hopes for this great country do not lie with the Boomers anymore…they lie with Generation O (Obama) (formally known as Slackers…Gen X or Gen Y) Generation O is a very capable, educated, responsible, hardworking group of kids with their feet firmly planted in environmental actions, care for all people, sustainability of the earth, focused local economies and wrapped in their network of friends and communities connected by the Internet and personal interactions. I have faith they will repair the damage our dream turned nightmare has wrought. But not to beat my generation up too badly…I would not trade the life I have lived for anything and know we have left this place a better place than what we found…but along the way made some huge blunders.

    Still another MNB user chimed in:

    This is why I like to read your column - you behave like the proverbial "gadfly on the horses back" of Aristotle fame. We have forgotten our conscience.

    Suggested (no REQUIRED) reading and testing for all executives, policy pimps, generals and those who claim to be statesmen: Aristotle's "Ethics". I think we collectively have lost sight of the concept and regrettably opt to mimic He who gets away with it, and not He who does it right. Lately, it seems the only role models are the former growing in number and spreading their contagion..

    But maybe a Change has come. Keep it up.


    Better a gadfly on the horse’s back” than a horse’s ass. Though I’ve been accused of being both.

    MNB user Geoff Harper wrote:

    Excellent radio bit. I think that trust can be regained, but only through a long and painful process, and one that demonstrates a new and consistent honesty. Perhaps the reason that we all read your column every weekday is because, although we do not always agree with you, we trust you. Perhaps that will cheer you up.




    Finally, MNB reported yesterday that the U.S. Commodity Futures Trading Commission (CFTC) announced that the Dairy Farmers of America, Inc. (DFA), its former Chief Executive Officer Gary Hanman, and its former Chief Financial Officer Gerald Bos will pay a $12 million civil monetary penalty for attempting to manipulate the Class III milk futures contract and exceeding speculative position limits in that contract.

    The Commission's DFA order finds that, from May 21 through June 23, 2004, DFA, Hanman, and Bos attempted to manipulate the price of the Chicago Mercantile Exchange's (CME) June, July, and August 2004 Class III milk futures contracts through purchases of block cheddar cheese on the CME Cheese Spot Call market. The order finds that the pricing relationship between the CME block cheese market and the Class III milk futures market is well known throughout the industry, and the CME block cheese market price plays a significant part in establishing Class III milk futures prices.

    And I commented: I’m going to be completely honest here. I have no idea what any of this means. None. Zip. Zero.

    But it sounded important – and yet another example of misplaced trust – so I thought it was worth inclusion on MNB.

    (There’s a Cheese Spot Call market? Wow. Next thing you know, we’re going to find out that the masterminds behind this scheme were Randolph and Mortimer Duke.)


    MNB user Andrea Heiland, who, it should be pointed out, is Chief Compliance Officer with Jones International Securities and therefore sounds like she knows what she is talking about, responded:

    I think you understand it just fine …

    They were spending a relatively small amount of money to purchase futures on cheese, which would then impact the price of milk futures directly. If the cheese is worth more, the milk must also be worth more as an input, right?

    If DFA had bought large amounts of milk futures (especially “exceeding speculative position limits” amounts, which is supposed to keep prices somewhat stable but seems like a theoretical constraint when you look at the oil bubble), flags would have been raised left and right. Using a subsidiary and buying cheese instead, as they did, is much sneakier.

    Pretty shady, and if it impacted dairy prices for lower income people or indirectly for taxpayers who pick up the tab for programs like WIC, they deserve a big lump of coal in their stocking along with these fines.


    Maybe I’d be better off if I’d taken at least one accounting or public finance class.

    Then again, maybe I’d be better off if I’d taken at least one journalism class.

    I studied filmmaking in college. Go figure.

    Of course, it is my filmmaking background that probably led to my reference to Randolph and Mortimer Duke, which elicited a number of emails…

    MNB user Hortencia Espinoza wrote:

    When I was reading your Radio MNB this morning about all of these unethical people in the business world which we are supposedly supposed to be trusting, I thought “What is this, Trading Places!”

    Low and behold you graced me with Randolph and Mortimer on the Chicago Cheese Spot Market issue (yes, it’s a real thing.)

    I really feel all these clowns watched the movie and thought they had attended their Business Ethics class.


    MNB user Marcia Wiener wrote:

    Well, after reading your cheese news I have to say that I didn’t understand it either. But anytime you can work in a reference to “Trading Places” it’s a thumbs up in my book! And despite the fact we didn’t get all the dialogue about their futures market and how it interrelates, we’re still talking about a nice punitive sum of $12 million. That’s not a small chunk of cheese!

    Looking good, Louis.

    Feeling good, Billy Ray.

    KC's View:

    Published on: December 19, 2008

    If you have not seen it, go to the “60 Minutes” website and check out last Sunday’s story about USC football coach Pete Carroll, which looks not just at his unique approach to molding the way young men behave on the gridiron, but also the way he spends much of his free time interacting with street gangs in Los Angeles. It is a remarkable story, and Carroll strikes me as a remarkable man – a winner in many ways, not least because he brings an unbridled enthusiasm and optimism to his various fields of endeavor.

    It seems to me that in many ways, Carroll defines the very nature of leadership, appealing to people’s best natures rather than the lowest common denominator. That appeal ranges from scholar-athletes that he deals with in his job, as well as young men who wander the mean streets of Los Angeles, fully expecting that they could be dead before turning 30. That’s something that more people in leadership positions ought to do…realizing that leadership is different from management, and that real leaders find ways to connect with a wide variety of people and attitudes, not just those who look like them and think like them and live like them.

    Check it out.




    You should also read Peggy Noonan’s column in today’s Wall Street Journal, which is a meditation on leadership and optimism from a completely different perspective. Noonan is one of our most elegant political writers, and the only thing I find hard to believe about her is that she was born in Brooklyn. (Listen to the soft cadences of her voice when he appears on television, and tell me you don't agree.)




    The Los Angeles Times reports on the latest application developed for the iPhone and iPod, called iBreath.

    According to the story, “The $79 accessory plugs into the base of the iPod and functions like a field sobriety test. The person using the iBreath exhales into a retractable ‘blow wand’ and the internal sensor measures the blood-alcohol content. Within two seconds, it displays the results on an LED screen. A reading of 0.08 or above sets off an alarm, signaling a blood-alcohol level above the legal limit in all 50 states.”

    Now, my first reaction to this was that it was a pretty cool application that had the potential to save lives.

    But, needless to say, not everyone sees it that way.

    Mothers Against Drunk Driving (MADD) objects to the device because it says that young people may use it for drinking games, with the winner being the person who shows the highest reading after a night of binge drinking. And others object to it because they say it will give some people who have no business driving a false sense of security.

    Both applications seem possible.

    But that’s the great question that can be applied to almost all technology applications, isn’t it? Innovations can be used for good purposes and for bad, and it is hard for me to understand why we should abandon such innovations because some people behave badly.




    It obviously has been a week loaded with interesting news stories, but I have to admit that the one that has most grabbed my attention was the one reporting that Drew Peterson is engaged to a woman who, if and when the nuptials take place, will be wife number five.

    In case you’ve lost track, wife number three, Kathleen Savio, was the victim of a 2004 homicide that still has not been solved. Wife number four, Stacy Peterson, disappeared in October 2007 and still has not been found; police suspect that she is the victim of a homicide and have said that Drew Peterson is their only suspect.

    Now, you'd think that this pattern would be enough for pretty much any young woman who think twice about spending any time with this guy. But, apparently not.

    However, this isn’t the part of the story that grabbed my attention.

    No, it was this sentence, from the Joliet Herald News:

    “Peterson's publicist, Glenn Selig, said Drew's betrothed is a 23-year-old woman from the Bolingbrook area, making her even younger than Stacy, who would be 24.”

    Peterson’s publicist???????

    This guy has a publicist? And just out of curiosity, is he paying for the publicist out of the insurance money he got when his third wife was killed?

    How does this happen?

    And more important, how do I get a publicist? (I hope I don't have to murder my wife.)




    Imitation is said to be the sincerest form of flattery.

    Just ask Hertz and Zipcar.

    The New York Times reports that Zipcar, which has pioneered a car rental system that allows customers to easily rent vehicles in major cities by paying an annual fee, is getting new competition from Hertz, which is adapting pretty much the same model.

    The Times writes, “Like Zipcar, Connect by Hertz members can make reservations online and use swipe cards to open their cars, which will be parked at 10 lots in Midtown Manhattan. In a nod to Zipcar’s success in signing up young drivers, the Toyota Prius and the Mini Cooper will be among the first 35 cars that Connect by Hertz will offer in New York.

    For the moment, Zipcar has the advantage with about 5,500 cars in 13 big cities, while Hertz is just testing the concept in New York…though Hertz plans a 20 US city rollout next year.

    Which means that the folks at Zipcar will have to find their next differential advantage. They can't waste time moaning and groaning about being innovators; they have to work to find the next innovation.




    Went down to the wine cellar the other day (okay, it isn’t really a wine cellar…it is more like a basement with wine racks) and found a bottle that had a lot of dust on it, a bottle that I have no recollection where it came from. And it was delicious – a 2003 Castano Solanera Vinas Viejas from Spain that was thick with flavor and, once it breathed for about 15 minutes, was incredibly smooth.

    They say that one of the pleasures of the recession will be that those of us who have stashed wines in various corners over the years will have reason to dig them out and try them…which is cheaper than going to the wine store.

    A more recent acquisition that I really liked is from Argentina, the 2006 Andeluna Winemaker’s Selection Malbec – fabulous with grilled meats and spicy food.




    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    Sláinte!!

    KC's View: