FTC loses appeal to stop Whole Foods deal: company

By Diane Bartz

WASHINGTON (Reuters) - A federal appeals court on Thursday denied a request from the Federal Trade Commission to temporarily block Whole Foods Market Inc (WFMI.O) from merging with rival Wild Oats Markets Inc OATS.O, a Whole Foods spokeswoman said.

The ruling may clear the way for the two organic grocery chains to complete their planned $565 million deal. Whole Foods' tender offer for Wild Oats shares expires at the close of business on Monday.

Whole Foods spokeswoman Kate Lowery said the appeals court in Washington, D.C. turned down the FTC's attempt to block the deal. She had no other immediate information.

An FTC spokesman was not immediately available for comment.

The FTC went to the U.S. appeals court last week after a lower court judge refused to temporarily halt the merger.

U.S. District Court Judge Paul Friedman's 93-page opinion rejected the government's argument that the deal would be anti-competitive in two dozen markets and hurt consumers. The judge also ignored Whole Foods CEO John Mackey's e-mails expressing a desire to crush the smaller company.

The Consumer Federation of America also filed documents with the court saying that the merger would lead to higher prices and fewer choices for buyers of organic products.

Whole Foods contends that it competes against larger supermarket chains such as Safeway Inc (SWY.N) and not just small, premium stores such as Wild Oats.

Austin, Texas-based Whole Foods operates nearly 200 stores in the United States and Britain, while Wild Oats of Boulder, Colorado, runs about 110.