Whole Foods, Wild Oats Integration Challenged By FTC

PORTLAND, Ore. — The Federal Trade Commission on Monday asked a federal judge to halt the integration of Wild Oats and Whole Foods Market as part of an ongoing legal battle over the 2007 deal that combined the two natural grocery chains.

The FTC wants a U.S. District Court judge to force Whole Foods to stop any integration activities while one of multiple disputes over its acquisition of Wild Oats is handled in court.

If the judge finds the FTC has a strong enough case, the regulators say they could completely unwind the companies.

Federal regulators said in their filing that the request is "appropriate, and reasonable" to preserve the assets of Wild Oats until the conclusion of the hearings. The FTC said it would not comment further on pending litigation.

Whole Foods officials called the FTC's request "absurd" and said the process of integrating Wild Oats is done.

"They want us to put the toothpaste back in the tube," said Lanny Davis, an attorney representing Whole Foods. "How can you halt something that is already done?"

Whole Foods Market Inc. bought Wild Oats Markets Inc. of Boulder, Colo. for $565 million. The Austin, Texas-based company then spent millions more converting Wild Oats stores into Whole Foods sites and selling off others.

But the FTC's challenge, which began in 2007 before the acquisition closed, has left it in legal limbo.

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The FTC has long argued the deal would create a natural-foods monopoly.

Whole Foods argues organic and natural foods are widely available from other sources, and it has said the process for reviewing the is deal flawed and even sued the FTC for violating its rights.

The U.S. District Court is expected to decide in coming months whether public interest demand a full-scale hearing. A separate antitrust hearing is scheduled later this year.

"First, they pronounce us guilty without one day in court of evidence," Davis said. "Now, they are demanding remedy before we even go to court."

The antitrust case has posed added challenges for Whole Foods as other grocers have tried to stay out of the legal battle.

Whole Foods lawyers are seeking information that would illustrate the grocer is not a monopoly, but many grocers are resisting sharing proprietary information.

Tuesday, Whole Foods plans to urge grocers to share their business practices, adding a legal nudge and asking the court to add a layer of protection to assure them Whole Foods will not see the information.

Whole Foods chief executive officer John Mackey also sent letters Monday that assure the grocers his company won't see it.

Comments

[Topfeeder]

I have a Whole Foods within 5 miles of me and I never shop there. Why? Because they are the most expensive grocery store in Jacksonville. My neighborhood Publix supermarket has almost everything WF does at a fraction of the cost. True, there is none of that WF snob appeal but I'd rather save the money.

[SwingingFromCenter]

I typically don't shop at either of these places except in the rarest of circumstances, but I can relate one story:

Since the Wild Oats here became a Whole Foods, ALL the meat in the butcher's section has gone up at least 2 dollars a pound (with the exception of ground beef). It's about the only metric I can apply since there's absolutely nothing else I ever go there for. It just so happens that where I live, the Wild Oats (now Whole Foods) was the only place in town I could buy things like boar or alligator.

[VivaZapata]

Pretty weird, or is it something more sinister, that grocery chains are where the FTC draws the line.

[strangebee]

Ridiculous.

[paulbikes]

Seriously?

But giant media conglomerates and massive banks that both screw us all over are cool?

Ive never even heard of those grocery stores, and i doubt their merging is a threat to the natural foods co-op in my town...

[SEQUOIABISON]

As a vegan, I shop frequently at Whole Foods because of the large selection of Organic produce, which, I believe encourages many domestic farmers to shed their dependency on Petro-Chemical pesticides, and cater to the demand for Organically grown food.

However, many supermarkets also have large sections dedicated to Organic food and the numbers are growing, so I think it is absurd to say Whole Foods has cornered the market in this area. Whatever Whole Foods does it will not stop the movement or competition to offer whole nourishing food without poisons added to them.

[gascelebrations]

I shop at Whole Foods, but infrequently. Their produce is never local and they do not encourage organic farming. Then there's the John Mackey controversy which left a weird vibe about the WF shopping experience for me. At the very least it told me that "wholesome, sustainable" grocery stores are still multinational congloms who swallow up competition at any cost like Wal Mart. I shop at a co-op whenever possible and try to find alternatives to big box groceries (and yes, WF is a big box grocery, even though it is filled with scrumptious salad bars and nifty candles).

[horhay]

So if a corporation is too big(a monopoly?) to fail, they'll receive a multi-billion dollar bailout. But if a sustainable food promoting market wants to increase their number of stores by merging with another similar chain, then there's a problem?

[thelindyhopper]

I don't find Whole Foods to be sustainable food promoting. A lot of their produce is not in season and is shipped from the other hemisphere. Thus, a lot of oil used.

This is in contrast to the local co-op that will mark all their local products with a red tag, so you know what you are buying and I'd say 80% of what they are selling at the co-op is local. Big difference.

[horhay]

My main point was that the FTC is not being equitable when they are saying that Whole Foods acquisition of Wild Oats will create a monopoly. Walmart, AT&T, the financial corporate oligarchy appear to be more like monopolies.

But your point about Whole Foods produce creating a large carbon footprint is true. For me, personally, I've never thought Whole Foods had the best quality produce anyway. Most of it sits in a "central" distribution center before it is finally shipped to the stores. But this is how the more mainstream markets distribute their produce as well with even less of it being organic. I think the reason Safeway & Walmart started selling organic produce was because they saw how well Whole Foods was doing. Safeway even started remodeling their stores, practically mimicking Whole Foods.

I agree that Co-ops have better, usually local produce. So do farmer's markets and small produce stores. But nothing beats growing your own.

Still, I think that Whole Foods does at least try to promote sustainable agriculture. They are the only large chain that I know of that has a decent bulk foods section, which is the main reason I shop there. They are expensive and do sell produce out of season/not locally grown, but I think they do try to educate people about the benefits of organic produce and non-GMO products.

[deckard70]

Even Safeway has a natural foods section now (to compete with Whole Foods). The competition is evident. Who is wasting money on a trial? Ridiculous.

[ZellaBee]

The so-called organics in Safeway and other supermarkets are under a new more lax organic labeling system. They are not really completely organic. They state very vague things like "No pesticides, hormones used."
What does that mean? Used When? After it got to the processing plant? Buyer beware!

[thelindyhopper]

I don't exactly know what that means, but some of the stands at farmer's markets will tell you the same thing. It maybe a way to trick consumers, but I think part of it is because it takes a lot of money and a long time for farms to get certified organic. So, perhaps in the mean time, they are using and intermediate marketing.

[stangle]

whole foods isn't a monopoly, there's still trader joe's!

[robbor]

uh, what about the massive, super banks that were "too big to fail" that got $325 billion to bail them out only to turn around and buy more banks? Who's going to step in and break up these ever expanding institutions who are clearly becoming monopolistic?

[Citizen54]

Good to see our government really looking out for us by taking on the truly evil threats to our society.

[thoughtmuse]

LOL

[BetterDeadthanRedState]

What difference does it make, they'll soon both be gobbled up by Walmart.

[westcoastsc]

The FTC is correct in challenging this. Whole Oats has cheaper food and some brands of better quality. I hope these people who somehow think that monopolies are better would get a clue.

[ZellaBee]

They aren't challenging it for the reason they claim though. The real reason is to bust up the health food, supplements and organic industries so the the population is forced into buying commercially produced, additive filled, GMO foods,becoming less healthy and needing more drugs, health insurance and the corrupt health care monopolies.
The whole anti trust thing was a really good idea, back in the day, but the past several years of mergers and acquisitions, big box stores, etc. is proof that it is rarely enforced and now only when the government wants to bring an industry into it's complete control and make huge profits. Of course now we are suffering for it and small businesses are the hardest hit. Thanks to the greedy SOB's

[nomoredead]

If they tried the ' creme brulee french toast ' in the morning off the breakfast bar they would let them do what ever they wanted. Yummy