Worn down by feds, Whole Foods turns to lobbying
By: Timothy P. Carney
Examiner Columnist
March 25, 2009
Whole Foods, the specialty supermarket chain that cultivates organic foods and an upscale image, has bucked the rest of the business lobby and joined with Starbucks and Costco in a coalition pushing a compromise with labor unions.
Over the weekend, the three companies reached out to the unions that are trying to get in a stronger position to sign up workers. Though not embracing labor’s preferred “card-check” method of unionizing shops, the coalition did advocate new laws to make unionizing easier. The National Right to Work Legal Defense Foundation attacked the coalition’s overture, and many conservatives called it a business sellout.
While Costco and Starbucks have long records of political liberalism, Whole Foods Chief Executive Officer John Mackey has publicly propounded a free-market philosophy. But Whole Foods’ alliance with these left-leaning corporations has a broader significance: The company is joining the long line of corporations that, after decades of resisting the influence game and paying a price for it, have joined the lobbying-for-profit brigade.
Mackey is an entrepreneur. He co-founded Whole Foods in 1980, with $45,000 in capital, and has turned it into a giant in the organic and fresh-food economy. He describes himself as “a free market libertarian,” and his only reported federal campaign contributions to date have been $6,500 between 1996 and 2000 to Libertarian candidates or the Libertarian Party.
Whole Foods was a little like Microsoft — before Congress and the Federal Trade Commission made a whipping boy of Bill Gates. Until last year, Whole Foods had never hired a lobbyist and never lobbied the federal government. And, as with Gates, the catalyst seems to have been aggressive federal intervention in Mackey’s business.
In February 2007, Whole Foods bought Wild Oats, a competitor in the organic market. Four months later, the Federal Trade Commission brought an antitrust complaint against the companies, contending that the merger would constitute a monopoly in the “premium natural and organic supermarkets,” even though mega-grocers and farmers markets sell organics.
Whole Foods won the case in district court, but the FTC appealed, setting off a two-year battle. Earlier this month, after $8 million in legal costs, the FTC agreed to drop all complaints and allow the merger if Whole Foods agreed to sell off 32 stores.
In the midst of this case, Whole Foods hired its first lobbyist, retaining the prestigious firm Covington & Burling (that relationship lasted only six weeks). In the fall, two weeks before the election, the company hired two new lobbyists, one on each side of the aisle: Joel Johnson of the Glover Park Group, who was Bill Clinton’s senior policy adviser and a top Democratic Capitol Hill aide, and Michael Torrey, who worked under the last two Republican agriculture secretaries.
After the election, Whole Foods picked up two more lobbyists: antitrust expert and Reagan administration alumnus Stephen Cannon and Bill Clinton’s former special counsel Lanny Davis.
It was Davis who this month coordinated the alliance among Whole Foods, Starbucks and Costco. Davis ran the conference call Sunday announcing the compromise, and his firm is the listed media contact for the Committee for a Level Playing Field coalition.
Costco doesn’t have any registered Washington lobbyists, but the company is an old hand at using government intervention for gain. The Institute for Justice has identified Costco as perhaps the most frequent corporate beneficiary of eminent-domain takings.
When Costco shareholder Susan Watson wrote the company to object to this use of government power to seize land from unwilling sellers, a Costco attorney defended the practice. “Much of urban America has been built using this tool,” he wrote. “We don’t see any legal or moral wrong in this. The fact is, if we refrained from participating in these deals, our competitors for these sites ... would take advantage of our reticence and our shareholders would be the losers.”
Also, in the spring of 2007, Costco spearheaded the business push for a higher minimum wage — an effort that smaller businesses mostly opposed.
Now Whole Foods is making common cause.
This is how Washington and the lobbying industry ropes in new businesses. It starts with government threats against a successful company. It ramps up with hiring well-connected lobbyists who craft political compromises. Soon, it’s bailouts, earmarks, and regulations to quash competitors. Whole Foods isn’t playing Washington hardball yet, but history suggests it’s just a matter of time.
