WASHINGTON - Two starkly different pictures of Wild Oats' financial health emerged in court Wednesday.

According to the Federal Trade Commission, Whole Foods was so worried by the Boulder-based company's successful turnaround that it offered $671 million to eliminate a resurgent competitor. Wild Oats, however, says its customer count has been declining for the past five years and it's in no position to go head-to-head with its larger rival.

"We're not saying Wild Oats is a failing firm," Wild Oats lawyer Clifford Aronson said. "We're saying it's a weakened firm."

Aronson's arguments came in the final day of a two-day hearing to determine whether a federal judge will block Whole Foods' planned purchase of Wild Oats. U.S. District Judge Paul Friedman indicated he will rule by Aug. 15; the deal is set to expire at the end of August.

Without FTC approval, the deal is unlikely to happen.

The FTC has argued that the merger of the nation's two biggest premium organic and natural foods stores would result in higher prices for consumers. Austin, Texas-based Whole Foods counters that it's just a fraction of the much larger supermarket industry, and conventional chains like Safeway are increasingly stealing customers as they move into the organic foods market.

Lawyers for the FTC started the day by saying Whole Foods CEO John Mackey noticed that Wild Oats "is a stronger business in many respects" than in years past, when Whole Foods could have paid far less for its rival.

"It's only when Wild Oats is a competitive threat that its value goes up," said Michael Bloom, a lawyer for the FTC. "It's only when Wild Oats is expanding into Whole Foods' backyard that its value goes up."

Aronson countered that the FTC was basing that rosy characterization of the company's future on former CEO Perry Odak, who left Wild Oats last year. Aronson said Odak's testimony "isn't credible" because he was asked to leave after the board lost confidence in his strategic direction and he was often uncooperative during his depositions.

Wild Oats attorneys spent about 20 minutes in a closed courtroom discussing confidential evidence to indicate that Wild Oats hasn't been an effective competitor against Whole Foods.

Protecting financial information has been a big issue in this case, which is being closely watched by major supermarkets that have been subpoenaed for sensitive financial information. Friedman said he might have to initially issue the majority of his opinion under seal to protect confidential information.

During his closing arguments, Bloom dismissed Whole Foods' argument that Safeway, SuperValu and other grocery chains are repositioning their stores to go after organic shoppers and foodies willing to pay more for a wider selection and better quality.

Whole Foods carries some 30,000 different types of natural and organic products, Bloom said, while the most ambitious conventional supermarket moving into the same space - whose name wasn't disclosed to the public - hopes to someday carry some 5,000. Trader Joe's, which is also often mentioned as a Whole Foods competitor, has an average store size of 11,000 square feet, compared with Whole Foods' 40,000-square-feet emporiums.

If the purchase goes through, the only other stores in the nation that would compete in the same market as Whole Foods are Earth Fare in the Southeast and New Seasons in Oregon, Bloom said.

Whole Foods attorney Paul Denis countered that the FTC's distinction of a separate premium natural and organic supermarket niche "has no industry recognition" and the industry hasn't shown any evidence that Whole Foods plans to raise prices. In fact, Denis said it is "undisputed" that Wild Oats prices are generally higher than Whole Foods.

Highlights Wednesday's testimony

• Cabrito, Spanish for "little goat," was Whole Foods' code name for Wild Oats when pondering the acquisition.

• Whole Foods initially planned to keep open only 35 of Wild Oats' 110 stores, the FTC said, but has since considered a number of alternatives. In one scenario, Whole Foods would keep Wild Oats stores open as a lower-priced alternative, the FTC said.

• "If you ask the cognoscenti, they would say that Wild Oats has a reputation for greater purity. Whole Foods, if you asked the cognoscenti, they would tell you has a reputation for fresher perishables," FTC lawyer Michael Bloom said in his closing statement.

What's next

• The judge has said he will rule before he goes on vacation Aug. 15, just two weeks before the deal is set to expire at the end of the month.

davisj@RockyMountainNews.com or 303-954-2514