Whole Foods and FTC battle over ending antitrust review

WASHINGTON Wed Oct 24, 2007 7:00pm EDT

The sign at the home office of Wild Oats Markets, Inc. is seen in Boulder, Colorado, June 13, 2007. The Federal Trade Commission has refused to drop its fight against Whole Foods Market Inc's merger with rival grocer Wild Oats, saying it still wanted to review the deal, even though the two companies have combined, according to a court document. REUTERS/Rick Wilking

The sign at the home office of Wild Oats Markets, Inc. is seen in Boulder, Colorado, June 13, 2007. The Federal Trade Commission has refused to drop its fight against Whole Foods Market Inc's merger with rival grocer Wild Oats, saying it still wanted to review the deal, even though the two companies have combined, according to a court document.

Credit: Reuters/Rick Wilking

WASHINGTON (Reuters) - The Federal Trade Commission has refused to drop its fight against Whole Foods Market Inc's WFMI.O merger with rival grocer Wild Oats, saying it still wanted to review the deal, even though the two companies have combined, according to a court document.

The FTC filed a motion on Monday opposing Whole Foods' request that its case before the U.S. Appeals Court for the D.C. Circuit be dropped as moot.

Whole Foods completed its $565 million acquisition of smaller rival Wild Oats in August after the FTC failed to win a temporary injunction to stop the merger, while the agency's administrative examination of the deal unfolded.

In its new court filing, the FTC argued the merger could still be found to be in violation of antitrust statues and that the FTC could still effectively demand changes to the structure of the deal.

"Whole Foods' own pronouncements establish that the consummation of the merger on paper does not mean that the integration of the two companies is complete," the FTC told the court of appeals.

It cited as evidence Whole Foods' decisions to close fewer stores than anticipated and to keep shops slated for shuttering open for at least several months.

The FTC also asked for a "prompt briefing schedule" so that the case could move forward quickly.

In a second portion of its motion, the FTC argued it possessed the authority to decide if mergers violated antitrust rules.

A Whole Foods spokeswoman had no immediate comment.

One antitrust expert said the FTC's decision to press the lawsuit was interesting.

"More fascinating to the antitrust aficionado, the FTC is trying to defend their administrative turf," said Mike Knight, a former FTC antitrust official now with Cooley Godward Kronis LLP.

"Courts have gotten away from providing the agency much deference," said Knight. "I think this is probably an uphill battle for the FTC, but there is some good case law for them in the D.C. circuit."

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