Federal Trade Commission v. Whole Foods Market, Inc.,
[United States Court of Appeals for the District of Columbia Circuit, Federal Trade Commission v. Whole Foods Market, Inc., No. 07-5276, Circuit Judge Brett M. Kavanaugh, dissenting (November 21, 2008)]
The Federal Trade Commission has sought a preliminary injunction to block the Whole Foods–Wild Oats merger as anticompetitive under § 7 of the Clayton Act. As in many antitrust cases, the analysis comes down to one issue: market definition. Is the relevant product market here all supermarkets? Or is the relevant product market here only so-called "organic supermarkets"?
If the former, as Whole Foods argues, the Whole Foods–Wild Oats merger would be lawful because it would not lessen competition in the broad market of all supermarkets: Whole Foods and Wild Oats together operate about 300 of the approximately 34,000 supermarkets in the United States. If the latter, as the FTC contends, the merger may be unlawful: Whole Foods and Wild Oats are the only significant competitors in the alleged organic store market, and their merger would substantially lessen competition in such a narrowly defined market.
More than a year ago, after a lengthy evidentiary hearing and in an exhaustive and careful opinion, the district court found that the record evidence overwhelmingly supports the following conclusions: Whole Foods competes against all supermarkets and not just so-called organic stores; the relevant market for evaluating this merger for antitrust purposes is all supermarkets; and the merger of Whole Foods and Wild Oats would not substantially lessen competition in a market that includes all supermarkets. The court therefore denied the FTC's motion for a preliminary injunction.
Also more than a year ago, a three-judge panel of this court unanimously denied the FTC's request for an injunction pending appeal, thereby allowing the Whole Foods–Wild Oats deal to close. Since then, the merged entity has shut down, sold, or converted numerous Wild Oats stores and otherwise effectuated the merger through many changes in supplier contracts, leases, distribution, and the like.
The court's splintered decision in this case seeks to unring the bell. In my judgment, this court got it right a year ago in refusing to enjoin the merger, and there is no basis for a changed result now. Both a year ago and now, the same central question has been before the court in determining whether to approve an injunction: whether the FTC demonstrated the necessary "likelihood of success" on its § 7 case. A year ago, the court said no. Now, the court says yes. The now-merged entity, the industry, and consumers no doubt will be confused by this apparent judicial about-face.
The law does not allow the FTC to just snap its fingers and temporarily block a merger. Even at the preliminary-injunction stage, the relevant statutory text and precedents expressly require that the FTC show a "likelihood of success on the merits." Because "[m]erger enforcement, like other areas of antitrust, is directed at market power," the FTC therefore needs to make a sufficient showing that the merged company could exercise market power and profitably impose a "small but significant and nontransitory increase in price," typically meaning a 5 percent or greater price increase. As the district court concluded, the FTC did not come close to presenting that kind of evidence in this case; the FTC completely failed to make the economic showing that is Antitrust 101.
By seeking to block a merger without a sufficient showing that so-called organic stores constitute a separate product market and that the merged entity could impose a significant and nontransitory price increase, the FTC's position — which Judge Brown and Judge Tatel largely accept — calls to mind the bad old days when mergers were viewed with suspicion regardless of their economic benefits. I would not turn back the clock. I agree with and would affirm the district court's excellent decision denying the FTC's motion to enjoin the merger of Whole Foods and Wild Oats.
Section 7 of the Clayton Act prohibits mergers "where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly." The Horizontal Merger Guidelines jointly promulgated by two Executive Branch agencies (the Department of Justice and the FTC) implement that statutory directive and recognize that the key initial step in the analysis is proper product-market definition. Proper product-market analysis focuses on products' interchangeability of use or cross-elasticity of demand. A product "market can be seen as the array of producers of substitute products that could control price if united in a hypothetical cartel or as a hypothetical monopoly."
In the merger context, the inquiry therefore comes down to whether the merged entity could profitably impose a "small but significant and nontransitory increase in price" typically defined as 5 percent or more. If the merged entity could profitably impose at least a 5 percent price increase (because the price increase would not cause a sufficient number of consumers to switch to substitutes outside of the alleged product market), then there is a distinct product market and the proposed merger likely would substantially lessen competition in that market, in violation of § 7 of the Clayton Act.
In considering whether the merged entity could increase prices, courts of course recognize that "future behavior must be inferred from historical observations." Therefore, the courts scrutinize existing markets to assess the probable effects of a merger.
This approach was applied sensibly by Judge Thomas Hogan in his thorough and leading opinion in FTC v. Staples (D.D.C. 1997). There, Judge Hogan found that office products sold by an office superstore were functionally interchangeable with office products sold at other types of stores, but he nonetheless found that office supply superstores constituted a distinct product market. One key fact led Judge Hogan to that conclusion: In areas where Staples was the only office superstore, it was able to set prices significantly higher than in areas where it competed with other office superstores (Office Depot and OfficeMax). For example, the FTC presented "compelling evidence" that Staples's prices were 13 percent higher in areas where no office-superstore competitors were present. Judge Hogan ultimately concluded that "[t]his evidence all suggests that office superstore prices are affected primarily by other office superstores and not by non-superstore competitors." For that reason, the court enjoined the merger of Staples and Office Depot.
Consistent with the statute, the Executive Branch's Merger Guidelines, and Judge Hogan's convincing opinion in Staples, the district court here carefully analyzed the economics of supermarkets, including so-called organic supermarkets. The court considered whether Whole Foods charged higher prices in areas without Wild Oats than in areas with Wild Oats. After an evidentiary hearing and based on a painstaking review of the evidence in the record, the court concluded that "Whole Foods prices are essentially the same at all of its stores in a region, regardless of whether there is a Wild Oats store nearby." That factual conclusion was supported by substantial evidence offered by Dr. David T. Scheffman, Whole Foods's expert, and by the lack of any credible evidence to the contrary.
Dr. Scheffman analyzed Whole Foods's actual prices across stores and concluded that "there is no evidence that [Whole Foods] and [Wild Oats] price higher" where they face no competition from so-called organic supermarkets compared with where they do face such competition. At a regional level, his studies revealed that only a "very small percentage" of products vary in price within a region, indicating that "prices are set across broad geographic areas." He also analyzed prices at the individual store level, examining how many products sold at a specific store have prices that differ from the most common price in the region. He found that "differences in prices across stores are generally very small (less than one half of one percent) and there is no systematic pattern as to the presence or absence of [organic supermarket] competition."
Moreover, the record evidence in this case does not show that Whole Foods changed its prices in any significant way in response to exit from an area by Wild Oats. In the four cases where Wild Oats exited and a Whole Foods store remained, there is no evidence in the record that Whole Foods then raised prices. Nor was there any evidence of price increases after Whole Foods took over two Wild Oats stores.
The facts here contrast starkly with Staples, where Staples charged significantly different prices based on the presence or absence of office superstore competitors in a particular area. The evidence there showed that Staples charged prices 13 percent higher in markets without office superstore competitors than in markets with such competitors. There is nothing remotely like that in this case.
In the absence of any evidence in the record that Whole Foods was able to (or did) set higher prices when Wild Oats exited or was absent, the district court correctly concluded that Whole Foods competes in a market composed of all supermarkets, meaning that "all supermarkets" is the relevant product market and that the Whole Foods–Wild Oats merger will not substantially lessen competition in that product market.
In addition to the all-but-dispositive price evidence , the district court identified other factors further demonstrating that the relevant market consists of all supermarkets.
The record shows that Whole Foods makes site selection decisions based on all supermarkets and checks prices against all supermarkets, not only so-called organic supermarkets. As Dr. Scheffman concluded, Whole Foods "price checks a broad set of competitors … nationally, regionally and locally." This "demonstrates that [Whole Foods] views itself as competing with a broad range of supermarkets and that these supermarkets, in fact, constrain the prices charged by [Whole Foods]." Those other supermarkets include conventional supermarkets such as Safeway, Albertson's, Wegman's, HEB, and Harris Teeter, as well as so-called organic supermarkets like Wild Oats.
As Professors Phillip Areeda and Herbert Hovenkamp have explained, a "broad-market finding gains some support from long-standing documents indicating that A or B producers regard the other product as a close competitor." The point here is simple: Whole Foods would not examine the locations of and price check conventional grocery stores if it were not a competitor of those stores. Whole Foods does not price check Sports Authority; Whole Foods does price check Safeway.
The record also demonstrates that conventional supermarkets and so-called organic supermarkets are aggressively competing to attract customers from one another. After reviewing a wide variety of industry information and trade journals, Dr. Scheffman concluded that "'[o]ther' supermarkets are competing vigorously for the purchases made by shoppers at [Whole Foods] and [Wild Oats]." Whole Foods "recognizes the fact that it has to appeal to a significantly broader group of consumers than organic and natural focused consumers." The record shows that Whole Foods has made progress: most products that Whole Foods sells are not organic. Conversely, conventional supermarkets have shifted towards "emphasizing fresh, 'natural' and organic [products] … most of the major chains and others are expanding into private label organic and natural products."
So the dividing line between "organic" and conventional supermarkets has blurred. As the district court aptly put it, the "train has already left the station." The convergence undermines the threshold premise of the FTC's case. This is an industry in transition, and Whole Foods has pioneered a product differentiation that in turn has caused other supermarket chains to update their offerings. These are not separate product markets; this is a market where all supermarkets, including so-called organic supermarkets, are clawing tooth and nail to differentiate themselves, beat the competition, and make money.
The district court's summary of the evidence warrants extensive quotation:
In sum, while all supermarket retailers, including Whole Foods, attempt to differentiate themselves in some way in order to attract customers, they nevertheless compete, and compete vigorously, with each other. The evidence before the Court demonstrates that conventional or more traditional supermarkets today compete for the customers who shop at Whole Foods and Wild Oats, particularly the large number of cross-shopping customers — or customers at the margin — with a growing interest in natural and organic foods. Post-merger, all of these competing alternatives will remain. Based upon the evidence presented, the Court concludes that many customers could and would readily shift more of their purchases to any of the increasingly available substitute sources of natural and organic foods. The Court therefore concludes that the FTC has not met its burden to prove that "premium natural and organic supermarkets" is the relevant product market in this case for antitrust purposes.
In an attempt to save its merger case despite its inability to meet the test reflected in the Merger Guidelines and applied in Staples, the FTC cites marginally relevant evidence and advances a scattershot of flawed arguments.
First, the FTC says that so-called organic supermarkets like Whole Foods and Wild Oats constitute their own product market because they are characterized by factors that differentiate them from conventional supermarkets. Those factors include intangible qualities such as customer service and tangible factors such as a focus on perishables.
This argument reflects the key error that permeates the FTC's approach to this case. Those factors demonstrate only product differentiation, and product differentiation does not mean different product markets. As the district court noted, supermarkets, including so-called organic supermarkets, differentiate themselves by emphasizing specific benefits or characteristics to attract customers to their stores. They may differentiate themselves along dimensions such as "low price, ethnic appeal, prepared foods, health and nutrition, variety within a product category, customer service, or perishables such as meats or produce."
The key to distinguishing product differentiation from separate product markets lies in price information. As Professors Areeda and Hovenkamp have stated, differentiated sellers "generally compete with one another sufficiently" that the prices of one are "greatly constrained" by the prices of others. To distinguish differentiation from separate product markets, courts thus must "ask whether one seller could maximize profit" by charging "more than the competitive price" without "losing too much patronage to other sellers."
Here, in other words, could so-called organic supermarkets maximize profit by charging more than a competitive price without losing too much patronage to conventional supermarkets? Based on the evidence regarding Whole Foods's pricing practices, the district court correctly found that the answer to that question is no. So-called organic supermarkets are engaged in product differentiation; they do not constitute a product market separate from all supermarkets.
Second, the FTC points to internal Whole Foods studies and other evidence showing that if a Wild Oats near a Whole Foods were to close, most of the Wild Oats customers would shift to Whole Foods. But that says nothing about whether Whole Foods could impose a 5 percent or more price increase and still retain those customers (and its other customers), which is the relevant antitrust question.
In other words, the fact that many Wild Oats customers would shift to Whole Foods does not mean that those customers would stay with Whole Foods, as opposed to shifting to conventional supermarkets, if Whole Foods significantly raised its prices. And even if one could infer that all of those former Wild Oats customers would so prefer Whole Foods that they would shop there even in the face of significant price increases, that would not show whether Whole Foods could raise prices without driving out a sufficient number of other customers as to make the price increases unprofitable.
In sum, this argument is a diversion from the economic analysis that must be conducted in antitrust cases like this. The district court properly found that the expert evidence in the record leads to the conclusion that Whole Foods could not profitably impose such a significant price increase.
Third, the FTC cites comments by Whole Foods CEO John Mackey as evidence that Whole Foods perceived Wild Oats to be a unique competitor. Even if Mackey's comments were directed only to Wild Oats, that would not be evidence that Whole Foods and Wild Oats are in their own product market separate from all other supermarkets. It just as readily suggests that Whole Foods and Wild Oats are two supermarkets that have similarly differentiated themselves from the rest of the market, such that Mackey would be especially pleased to see that competitor vanish. Beating the competition from similarly differentiated competitors in a product market is ordinarily an entirely permissible competitive goal. Saying as much, as Mackey did here, does not mean that the similarly differentiated competitor is the only relevant competition in the marketplace.
Moreover, Mackey nowhere says that the merger would allow Whole Foods to significantly raise prices, which of course is the issue here. In any event, intent is not an element of a §7 claim, and a CEO's bravado with regard to one rival cannot alter the laws of economics: mere boasts cannot vanquish real-world competition — here, from Safeway, Albertson's, and the like. As Judge Frank Easterbrook has explained,
Firms need not like their competitors; they need not cheer them on to success; a desire to extinguish one's rivals is entirely consistent with, often is the motive behind, competition. … If courts use the vigorous, nasty pursuit of sales as evidence of a forbidden 'intent', they run the risk of penalizing the motive forces of competition.…Intent does not help to separate competition from attempted monopolization…
Fourth, the FTC says that a study by its expert, Dr. Kevin Murphy, demonstrates that Whole Foods's profit margins decreased in geographic areas where it competed against Wild Oats. But the relevant inquiry under the Merger Guidelines is prices. And Dr. Murphy did not determine whether Whole Foods prices ever differed as a result of competition from Wild Oats.
Moreover, there was only a slight difference between Whole Foods margins when Wild Oats was in the same area and when it was not. The overall difference was 0.7 percent, which Dr. Murphy himself recognized was not statistically significant. The FTC's evidence on margins is wafer-thin and does not suffice to show that organic stores constitute their own product market.
Fifth, the FTC points to evidence that Whole Foods's entry into a particular area, unlike the entry of conventional supermarkets, caused Wild Oats to lower its prices. Dr. Murphy's reliance on Wild Oats's reaction to Whole Foods's entry is questionable. Dr. Murphy based his entire analysis on a meager two events, hardly a large sample size. In addition, Dr. Murphy's analysis did not control for the reaction of conventional supermarkets to Whole Foods's entry. In other words, he assumed that the relevant product market was so-called organic supermarkets (the point he was trying to prove) and therefore assumed that all changes in Wild Oats's prices were directly caused by Whole Foods's entry.
But if conventional supermarkets also lowered prices to compete with Whole Foods when Whole Foods entered, Wild Oats's price decreases may well have been due to the overall reduction in prices by all supermarkets in the area. If that were true, the relevant product market would obviously be all supermarkets, not just so-called organic supermarkets. Dr. Murphy's analysis never confronted that possibility or the complexity of how competition works in this market; his analysis appears to have assumed the conclusion and reasoned backwards from there.
Moreover, the fact that Whole Foods and Wild Oats went toe-to-toe on occasion does not mean that they did not also go toe-to-toe with conventional supermarkets, which is the key question. And it is revealing that despite having access to the necessary data for six such events, Dr. Murphy did not analyze the effect of a Wild Oats exit on Whole Foods's prices. As Dr. Scheffman wrote:
A number of [Wild Oats] stores have closed. … [Dr. Murphy] has done no analysis to assess the effects of those store exits in the local shopping areas. … This is a curious omission, since such evidence, if reliable and reliably analyzed, would be relevant to the issue of what happens in local market areas in which a [Wild Oats] store closes.
The bottom line is that, as the district court found, there is no evidence in the record suggesting that Whole Foods priced differently based on the presence or absence of a Wild Oats store in the area. That is a conspicuous — and all but dispositive — omission in Dr. Murphy's analysis and in the FTC's case.
Sixth, the FTC cites the openings of three Earth Fare stores near Whole Foods stores in North Carolina, which caused decreases in Whole Foods's prices in those areas. But soon after those entries, Whole Foods's prices returned to normal levels. So the record hardly shows the sort of "nontransitory" price changes that are the touchstone of product-market definition. A price increase ordinarily must last "for the foreseeable future," considered by some to be more than a year, to qualify as "nontransitory." Moreover, the entry of a Safeway store in Boulder, Colorado, had a similar short-term impact on Whole Foods, indicating that whatever inference should be drawn from the Earth Fare entries cannot be limited to so-called organic supermarkets but rather applies to conventional supermarkets.
The FTC's reference to Earth Fare mistakenly focuses on a few isolated trees instead of the very large forest indicating a competitive market consisting of all supermarkets. In short, I fail to see how Whole Foods's temporary price changes to compete against three Earth Fare stores in North Carolina could possibly be a hook to block this nationwide merger of Whole Foods and Wild Oats.
The opinions of Judge Brown and Judge Tatel rest on two legal points with which I respectfully but strongly disagree.
First, the court's decision resuscitates the loose antitrust standards of Brown Shoe Co. v. United States, 370 U.S. 294 (1962), the 1960s-era relic. This is a problem because Brown Shoe's brand of freewheeling antitrust analysis has not stood the test of time. As demonstrated in this court's most recent merger case, the practical indicia test of Brown Shoe no longer guides courts' merger analyses because it does not sufficiently account for the basic economic principles that, according to the Supreme Court, must be considered under modern antitrust doctrine.
Judge Robert Bork forcefully catalogued the flaws in the Brown Shoe approach 30 years ago in his landmark antitrust book; indeed, his cogent critique helped usher Brown Shoe and several other cases to the jurisprudential sidelines. The court's revival of the loose Brown Shoe standard threatens to reverse this trend and to upend modern merger practice.
Second, the opinions of Judge Brown and Judge Tatel both dilute the standard for preliminary-injunction relief in antitrust merger cases, such that the FTC apparently need not establish a "likelihood of success on the merits." In particular, Judge Brown and Judge Tatel rely heavily on their belief that
[i]n this circuit, the standard for likelihood of success on the merits is met if the FTC has raised questions going to the merits so serious, substantial, difficult and doubtful as to make them fair ground for thorough investigation, study, deliberation and determination by the FTC in the first instance and ultimately by the Court of Appeals.
In applying this watered-down test for issuing a preliminary injunction in FTC merger cases, Judge Brown and Judge Tatel rely on language contained in our opinion in FTC v. H.J. Heinz Co. (2001). However, Heinz only assumed this particular gloss on the "likelihood of success on the merits" requirement for preliminary injunctions based on a concession in the case. Heinz did not hold that this gloss was the proper meaning of 15 U.S.C. § 53(b) in FTC preliminary-injunction merger cases.
This "serious questions" standard is inconsistent with the relevant statutory text. The statute unambiguously requires that courts consider "the Commission's likelihood of ultimate success" when the FTC seeks to preliminarily enjoin a merger.
There is a significant difference, moreover, between the relaxed "serious questions" standard applied by Judge Brown and Judge Tatel and the traditional likelihood of success standard — as the Supreme Court explained just a few months ago in Munaf v. Geren, (2008). To be sure, that case did not involve a merger; but the Supreme Court there did address the general likelihood-of-success preliminary-injunction standard — the same standard that is expressly articulated in 15 U.S.C. § 53(b). The district court in the [Munaf] litigation — like Judge Brown and Judge Tatel here — had concluded that a preliminary injunction was justified because the case presented questions "so serious, substantial, difficult and doubtful, as to make them fair ground for litigation and thus for more deliberative investigation." This court then affirmed the district court's preliminary injunction.
But the Supreme Court unanimously rejected that lesser "serious questions" standard as too weak and not equivalent to the "likelihood of success" necessary for a preliminary injunction to issue. And the Supreme Court directly criticized the approach of the district court and this court in the [Munaf] litigation: "one searches the opinions below in vain for any mention of a likelihood of success as to the merits."
The court in this case repeats the same mistake made in [Munaf] of watering down the preliminary-injunction standard. Both Judge Brown and Judge Tatel approve the FTC's request for preliminary injunction without making the essential "likelihood of success" finding that is required by the statutory text and Supreme Court precedent. To the extent the "serious questions" standard they apply was ever appropriate for preliminary-injunction merger cases, the combination of the clear statutory text in 15 U.S.C. § 53(b) and the Supreme Court decision in Munaf convincingly demonstrates that it is not the proper standard now.
In short, the approach of Judge Brown and Judge Tatel revives the moribund Brown Shoe practical indicia test and applies an overly lax preliminary-injunction standard for merger cases. I respectfully disagree on both counts. In my judgment, the FTC may obtain a preliminary injunction only by establishing a likelihood of success — namely, a likelihood that, among other things, the merged entity would possess market power and could profitably impose a significant and nontransitory price increase.
In reaching her conclusion, Judge Brown also relies on a distinction between marginal consumers and core consumers:
[i]n sum, the district court believed the antitrust laws are addressed only to marginal consumers. This was an error of law, because in some situations core consumers, demanding exclusively a particular product or package of products, distinguish a submarket.
But the FTC never once referred to, much less relied on, the distinction between marginal and core consumers in 86 pages of briefing or at oral argument. The terms "marginal consumer" and "core consumer" are nowhere to be found in its briefs.
In any event, I respectfully disagree with Judge Brown's emphasis on core customers. For a business to exert market power as a result of a merger, it must be able to increase prices (usually by 5 percent or more) while retaining enough customers to make that price increase profitable. If too many "marginal" customers are turned off by a price hike, then the hike will be unprofitable even if a large group of die-hard "core" customers remain active clients. Therefore, a focus on core customers alone cannot resolve a merger case.
The question here is whether Whole Foods could increase prices by 5 percent or more without losing so many marginal customers as to make the price increase unprofitable. As discussed above, the FTC has not come close to making that showing. Moreover, there is no support in the law for that singular focus on the core customer. Indeed, if that approach took root, it would have serious repercussions because virtually every merger involves some core customers who would stick with the company regardless of a significant price increase. So under this "core customer" approach, many heretofore-permissible mergers presumably could be blocked as anticompetitive. That cannot be the law, and it is not the law.
In a related vein, Judge Brown repeatedly suggests that Whole Foods and Wild Oats engage in "price discrimination" — more specifically, Judge Brown asserts that organic supermarkets "discriminate on price between their core and marginal customers, thus treating the former as a distinct market." But this assertion has no factual support in the record. For antitrust purposes, price discrimination normally involves one seller charging different prices to different customers for the same product. If there is price discrimination in an industry, then under certain circumstances a relevant market may be defined to include only those customers who pay the higher price. In this case, however, neither Judge Brown nor the FTC has pointed to any evidence suggesting either that price discrimination occurred before this merger or that the merged entity will be able to price discriminate. In other words, there is no reason to think that "core" as opposed to non-core customers ever pay higher prices for the same products in organic supermarkets.
In the end, the FTC's case is weak and seems a relic of a bygone era when antitrust law was divorced from basic economic principles. The record does not show that Whole Foods priced differently based on the presence or absence of Wild Oats in the same area. The reason for that and the conclusion that follows from that are the same: Whole Foods competes in an extraordinarily competitive market that includes all supermarkets, not just so-called organic supermarkets. The merged entity thus could not exercise market power such that it could profitably impose a significant and nontransitory price increase. Therefore, there is no sound legal basis to block this merger.
The issues presented in this case are important to antitrust regulators and practitioners, to potentially merging companies, and ultimately to the overall economy. The splintered panel opinions will create enormous uncertainty, debate, and litigation over the meaning and effect of this decision. And to the extent common principles and holdings are derived from the opinions of Judge Brown and Judge Tatel, those principles will authorize the FTC to obtain preliminary injunctions and block mergers based on a watered-down preliminary-injunction standard and without sufficient regard for the economic principles that have undergirded modern antitrust law. That will give the FTC far greater power to block mergers than the statutory text or Supreme Court precedents permit.
 This case was heard by a three-judge panel: Janice Rogers Brown, David S. Tatel, and Brett M. Kavanaugh. On July 29, 2008, Judges Brown and Tatel issued an opinion for the court supporting the FTC; Judge Kavanaugh filed a dissenting opinion. Subsequently, on November 21, 2008, Brown and Tatel withdrew their joint opinion and filed separate opinions, concurring in the result but differing in their reasons; Kavanaugh filed a revised dissenting opinion, which is reproduced here.
 When the FTC challenges a merger, there are usually two proceedings: the first is the administrative hearing before the agency's own judge on whether the merger is illegal; the second is before a federal district court to determine whether the merger should be enjoined pending the outcome of the first proceeding. In practice, the FTC usually abandons its administrative proceeding if it doesn't obtain the injunction, although this case was an exception.
 This panel included Judges Tatel and Kavanaugh, but not Brown. Judge David B. Sentelle was the third judge on the earlier panel.
 Following the D.C. Circuit's decision, Whole Foods signed a "consent order" with the FTC, forcing the company to sell 32 stores and related assets. The FTC appointed an outside firm to conduct the sales of the "divested" stores, which remain ongoing.
 Quoting the Executive Branch's Horizontal Merger Guidelines.
 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 530a, p. 226.
 Scheffman is a senior advisor at Capstone Research and twice served as the FTC's chief economist.
 Judge Tatel's opinion disparages the evidence about Whole Foods's prices, calling it "all-but-meaningless" and implicitly suggesting that Whole Foods manipulated its prices just for the expert study. But Judge Tatel offers no evidence for that suggestion.
 Antitrust Law, ¶ 562a, p. 372.
 A showing that the merged entity would possess market concentration in a defined product market is necessary but not sufficient to establish an antitrust violation. I need not address the other necessary components of the FTC's case, however, because the FTC has not satisfied the threshold requirement of showing that the merged entity would have such market concentration.
 Ibid., ¶ 563a, p. 384.
 Ibid., p. 385.
 According to Judge Tatel's opinion, the FTC's expert purported to say that Whole Foods could impose a 5 percent or greater price increase because of the number of Wild Oats customers who would switch to Whole Foods rather than conventional supermarkets. But that ambiguous statement constituted a single, unexplained sentence in the middle of a lengthy report. Moreover, the expert apparently based his conclusion entirely on the so-called "Project Goldmine" analysis of diversion ratios associated with store closures — that is, of the number of Wild Oats customers who would switch to Whole Foods in the event that a Wild Oats store closes and Whole Foods prices remain constant. As the expert himself appeared to acknowledge, the data do not necessarily shed any light on how many customers would continue to shop at a merged Wild Oats-and-Whole Foods entity in the event that the entity uniformly increased prices. All of this no doubt explains why the FTC never even mentioned this aspect of its expert's report in the argument section of its opening brief.
 A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396, 1402 (7th Cir. 1989).
 Professor of Economics at the University of Chicago Booth School of Business.
 The Antitrust Paradox: A Policy at War With Itself (New York: The Free Press, 1978).
 As two antitrust commentators perceptively stated: "The basic problem with the FTC's position in Whole Foods was that it lacked the pricing evidence it had in Staples, which showed that customers did not go elsewhere if the office superstores increased their prices. Whole Foods is an attempt by the FTC to persuade a court that if you take a CEO's statements about a merger and stir it in with evidence showing the existence of several 'practical indicia' from Brown Shoe, the resulting mixture should trump objective evidence about how customers would react in the event of a price increase." Carlton Varner & Heather Cooper, Product Markets in Merger Cases: The Whole Foods Decision (Oct. 2007), www.antitrustsource.com.
 The gloss on § 53(b) appears to have arisen originally in other circuits around the middle of the 20th century in connection with a more general view that a lighter "likelihood of success" standard is appropriate whenever the balance of equities weighs strongly in favor of issuing an injunction. But as explained below in footnote , Congress in 1973 codified a preliminary-injunction standard for FTC merger cases that specifically directs courts to consider the Commission's "likelihood of ultimate success." And as explained in the text, the Supreme Court recently repudiated the "serious questions" approach to preliminary injunctions in general by requiring a likelihood of success showing in all cases, regardless of whether the balance of equities weighs in favor of the injunction.
 In justifying his adoption of the "serious questions" test for likelihood of success, Judge Tatel highlights the "unique 'public interest' standard in 15 U.S.C. § 53(b)." But the statute explicitly preserves the traditional likelihood of success requirement. What makes § 53's standard for preliminary injunctions "unique," as we have explained, is that the FTC need not show irreparable harm and, secondarily, that private equities are subordinated to public equities. Far from reading the "likelihood of ultimate success" language out of the statute, we have recognized that the statutory phrase "weighing the equities and considering the likelihood of ultimate success" was specifically added by the Conference Committee and that this "deliberate addition" should not "be brushed aside as essentially repetitive or meaningless." See FTC v. Weyerhaeuser Co., 665 F.2d 1072, 1081 (D.C. Cir. 1981).
 The precedential effect of today's splintered decision is muddied somewhat by the fact that Judge Brown and Judge Tatel have issued individual opinions concurring in the judgment. That said, it is of course well settled that the mere fact that there is no majority opinion does not mean that the decision constitutes no precedent for future cases. This happens quite frequently with splintered Supreme Court decisions where there is no majority opinion. As the Supreme Court has repeatedly explained, in the vast majority of cases without a majority opinion there is still a binding holding of the Court — even if it can occasionally be difficult to determine. This is known as the Marks principle. Like the Supreme Court, this court has routinely recognized that a decision without a majority opinion usually still constitutes a binding precedent. Only in very rare cases do the opinions making up a majority of a court contain no common principles or common ground on which to derive any precedential holding of the court.
It is unclear whether district courts and future courts of appeals will construe this case as one of those rare situations that falls entirely outside the Marks rule. At a minimum, this confused decision will invite years of uncertainty and litigation over what the holding of this case is — a separate but important problem with the court's approach.