Whole Foods says sought rivals' help in FTC case

The sign for the Whole Foods grocery store is seen in Lakewood, Colorado September 11, 2007.

WASHINGTON (Reuters) - High-end grocery chain Whole Foods Market Inc (WFMI.O) said on Tuesday that defending itself against U.S. antitrust regulators could prove difficult because some rivals have balked at providing needed information.

Whole Foods, which is battling the Federal Trade Commission in three separate proceedings, said it had requested information from 93 retailers in 29 markets to bolster its argument that its 2007 merger with Wild Oats was legal. The FTC is trying to determine whether it violates antitrust law.

But "a certain number" of retailers are balking at providing data to Whole Foods, said Executive Vice President Jim Sud, who declined to be more specific.

Two chains, Gelsen's, a subsidiary of Arden Group Inc (ARDNA.O), in Southern California and New Seasons in Portland, Oregon, have asked for the subpoenas to be quashed.

Gelsen's, for example, said it withheld requested weekly sales figures for each Gelsen's store, saying it would help rival Whole Foods.

Whole Foods said the missing data hurt its ability to put together a defense for the FTC administrative law judge assessing the $565 million merger. The hearing is set for April.

"We are up against a very tight timeline," said Sud. "It is a big challenge for us to put it together."

In asking for the data, Sud stressed that the information would "not be seen by anybody at Whole Foods Market," not even the general counsel.

WILD OATS SIGNS NEARLY GONE

The merger itself, which the FTC has said it might order undone, is complete, except for changing a half-dozen signs, said Whole Foods outside counsel Lanny Davis.

On Monday, the FTC said it would seek to rebrand the acquired stores with their former Wild Oats signs if a court ruled it had a strong case against Whole Foods.

There are two other legal fights between Whole Foods and the FTC, both of them in U.S. District Court.

In one, Whole Foods has challenged the review process at the FTC, one of two agencies that assess mergers.

In the other, the FTC is asking for an injunction to stop the merger process, which the grocery chain says is complete.

The FTC has previously said that a significant number of the Wild Oats stores, and perhaps some legacy Whole Foods stores, could end up being sought as part of a remedy, perhaps requiring divestiture of 40 to 50 stores as well as their distribution channels. Wild Oats had 109 stores at the time of the merger.

The FTC's battle against Whole Foods was revived last July, when the U.S. Court of Appeals for the District of Columbia said the lower court underestimated the FTC's likelihood of success in denying the request for a preliminary injunction.

Whole Foods' legal fight has already cost the organic grocery chain $16.5 million dollars, Chief Executive John Mackey has said, and the company faces another $15 million to $20 million in legal bills as the case proceeds through the FTC's judicial system.

Federal Trade Commission vs Whole Foods Market, U.S. District Court, District of Columbia, No. 07-01021.

(Reporting by Diane Bartz, editing by Gerald E. McCormick)