Whole Foods denied hearing request in FTC fight

WASHINGTON (Reuters) - Whole Foods Market Inc (WFMI.O) lost a bid on Friday for a larger panel of judges to review an appeals court decision that threw into question the legality of its completed merger with former rival Wild Oats.

The U.S. Circuit Court of Appeals for the District of Columbia said in a brief order that it would not revisit its July decision, which revived the Federal Trade Commission's effort to block premium grocer Whole Foods' effort to buy Wild Oats.

A three-judge panel ruled on July 29 that a district court judge had erred when he refused to grant an FTC request for an injunction to block the deal.

Whole Foods then asked for an "en banc" hearing, which would have involved all of the appeals court's judges.

Whole Foods spokeswoman Kate Lowery said that most of Wild Oats had already been absorbed into Whole Foods. "The vast majority of the stores have already been converted to Whole Foods," said Lowery.

The judges who heard the appeal also issued an amended opinion that retains the injunction against the merger going forward.

"The D.C. Circuit Panel's amended ... decision increases our confidence that the Whole Foods-Wild Oats merger will ultimately be upheld as lawful," said Paul Denis, an attorney for Whole Foods Market.

"Whole Foods Market expects to continue vigorously defending the administrative proceeding initiated by the FTC, even though we believe it is an unfair process and a violation of the company's due process rights," said Denis.

The FTC had no immediate comment.

"It would have been a win for them if they had got the en banc appeal. But they didn't," said a source familiar with the FTC's thinking.

The FTC tried to challenge the merger in 2007, but a federal district judge refused to issue a preliminary injunction stopping the merger. It was finalized in August 2007.

The commission is one of two agencies that assesses whether mergers violate antitrust law.

Earlier this month, private equity firm Green Equity Investors bought preferred shares in Whole Foods for $425 million, which could give the fund about a 17 percent stake in the company if converted into common shares. Whole Foods plans to use the proceeds to pay down debt and to maintain long-term liquidity amid a slowing economy that has hurt its business.

(Reporting by Diane Bartz, editing by Gary Hill)