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Whole Foods looks to rivals for help in fight with FTC
Published January 14, 2009 at 12:05 a.m.
Photo by Mark Wilson / Getty Images/2008
John Mackey, CEO of Whole Foods, is surrounded by Whole Foods employees during a news conference last month on Capitol Hill.
Whole Foods is attempting to enlist some unlikely allies in its battle against federal regulators' challenge to the natural grocer's purchase of Boulder-based Wild Oats: its competitors.
Whole Foods CEO John Mackey sent a letter to supermarket chains in 29 markets around the country explaining why the company's outside attorneys will be asking for further documents in the more-than 18-month-old case.
Whole Foods also asked a judge for a protective order to prevent anyone in the company, including Mackey, from seeing any information marked confidential by rivals.
"The key issue for us to establish is that we actually or potentially compete with other supermarkets for customers in each of these 29 areas," Mackey wrote in a letter sent to other supermarket executives.
The request comes as the Federal Trade Commission is seeking to undo Whole Foods' $565 million acquisition that took place in 2007, arguing it would harm natural and organic foods consumers. U.S. District Judge Paul Friedman in Washington, D.C., in mid- 2007 allowed the deal to proceed, but an appeals court in July said Friedman dismissed the FTC's challenge too quickly and revived the case.
The case is now set for an April hearing before Friedman again. The FTC on Monday asked the judge to order Whole Foods to restore the Wild Oats Markets name to all the stores as well as appoint a special trustee to manage the Wild Oats assets.
Whole Foods said it has either sold off, closed or re-branded all of Wild Oats' 110 stores, as well as integrated every aspect of Wild Oats, from information technology to distribution, into Whole Foods.
"There is no more Wild Oats. There is no more Wild Oats corporate structure," said Jim Sud, Whole Foods executive vice president, in a conference call with reporters Tuesday.
Whole Foods said 93 competitors have or will receive the discovery requests, although it declined to name any specific supermarkets. Reuters reported that at least two chains - Gelsen's in Southern California and New Seasons in Portland, Ore. - have asked for Whole Foods' subpoenas to be quashed.
Whole Foods said it needs data from its rivals to help its defense, and Mackey in his letter attempted to appeal to the industry's common interest in fighting the FTC.
"I must say that if the FTC can act this way regarding" Whole Foods, "it is possible that some day in the future your company similarly may be victimized," Mackey wrote.
WHAT THEY'RE SAYING
"Here's a thought: Shovel some of those federal bailout bucks to the FTC. That would keep their lawyers in bonbons - and leave Whole Foods free to run its business."
Minyanville.com
"For a simple way to just end the discussion with any naysayers, show them Whole Foods' stock; it has been creamed, down massively from 52-week highs. Its all-time high was in 2006 before the merger. Obviously, a whole lot of people don't see some sort of invincible monopoly ahead due to Wild Oats being acquired!"
SeekingAlpha.com
"Trying to disentangle the Whole Foods/Wild Oats merger now doesn't make much sense and certainly won't restore confidence in the federal government's oversight of business. With stores closed or renamed, Wild Oats has little chance of winning back a customer base that has moved on.
bnet.com
The eggs have been scrambled, and it's hard to know how they would be unscrambled. This would be unprecedented in antitrust law, to force Whole Foods to build a whole separate brand."
Luke Froeb, former director of the bureau of economics at the FTC
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