Whole Foods asks for U.S. regulator's e-mails

WASHINGTON, Dec 22 (Reuters) - Grocery chain Whole Foods (WFMI.O) on Monday asked a court hearing the case in its fight with U.S. antitrust regulators to allow it to depose a top official reviewing its merger with Wild Oats and to obtain his staff e-mails.

The merger closed in August 2007 without approval from the Federal Trade Commission, which could annul it after an ongoing formal investigation.

Whole Foods maintains that it has been denied due process because it says the agency failed to be impartial in the case.

The retailer wants to depose Commissioner Thomas Rosch, a Republican on the FTC, because he voted to investigate the merger while also briefly acting as the internal FTC judge hearing the case.

"We think there's an inference to be drawn that Commissioner Rosch was in contact with investigative staff," said Lanny Davis, a lawyer for Whole Foods, pressing to obtain e-mails between Rosch and the staff.

Davis argued that an appropriate remedy would be to allow an FTC administrative law judge to decide the case. But instead of requiring the loser to go to the four FTC commissioners the case would be taken directly to an outside court.

"Yes, we would say the entire commission would have to be recused," he said.

Whole Foods also said it was unfair that different industries are subject to different merger procedures. The Justice Department has approved mergers that some regard as anti-competitive.

Mark Nebeker, an assistant U.S. attorney arguing for the FTC, asked for the Whole Foods case against the government to be dismissed. "Our view is the court doesn't have a role," he said.

The two sides also sparred over whether the merger process should be stopped while the FTC's administrative law judge hears evidence on whether the merger violated antitrust law. The FTC has suggested that Whole Foods and Wild Oats have separate managements until its review has been completed.

The FTC's lawyer, Matthew Riley, argued that Whole Foods had already closed 19 stores, let staff go and eliminated some Wild Oats discounts, such as for the elderly and students.

Paul Denis, an outside counsel for Whole Foods, noted that the merged company already has a unified human resources, purchasing and distribution network. "To set up a separate division would require a separate support system for that division," he said.

"So what?" shot back Judge Paul Friedman of the U.S. District Court for the District of Columbia.

However, in comments after the hearing, Whole Foods' Davis said that any FTC request to undo the merger was "wishful thinking."

"It's a wish list, if you will," he said.

The cases before Judge Friedman on Monday were Civ. No. 07-cv-01021-PLF and 08-cv-2121-PLF. (Reporting by Diane Bartz; editing by Richard Chang)