The conventional wisdom is that the Bush Administration has not seriously questioned any merger or buyout on antitrust grounds. That thought has not stopped the government from throwing a spanner in the works of the Whole Foods buyout of Wild Oats, reports the Associated Press.

The agency reports that the Justice Dept. will file suit to block the deal. The core contention is that Whole Foods operates in a much more specialized niche than "supermarkets." The natural and organic sector is pretty much locked up by these two companies, the government will argue.

Are those lawyers crazy? Don’t they ever shop, even on Saturday mornings? Every supermarket in town has quickly developed an organic section and they’ve been working for the last few years to develop more specialty and high-margin goods in delis, bakeries etc. In other words, most supermarkets are focusing on the more profitable gourmet sector and that means the exotic and the organic.

The other issue is whether the merger is a real barrier to entry. Of course, it would take a few million dollars but no market would be immune to a new store or even a chain with the right supplies from challenging the company that would be formed by the proposed $670 million deal. It sure is an odd choice to take a stand on the Sherman Act.