Texas-based Whole Foods Market has vowed to challenge the US Federal Trade Commission after the regulator stepped in to prevent the world's largest organic and natural products retailer from acquiring its major US rival and creating a 300-store mega-chain.
The FTC notified Whole Foods that it will be filing a complaint in the US District Court in Washington, DC, to prevent the Whole Foods takeover of Colorado-based Wild Oats. The FTC also sought a restraining order to prevent Whole Foods from completing its $670 million acquisition of Wild Oats while the Court considered its verdict.
Whole Foods Chairman and Chief Executive Officer John Mackey said the retailer would extend its takeover deadline beyond June 20 and fight the FTC action. "We are very disappointed by this decision and we intend to vigorously challenge the FTC in court," he said. "The FTC has failed to recognise the robust competition in the supermarket industry, which has grown more intense as competitors increase their offerings of natural, organic and fresh products, renovate their stores and open stores with new banners and formats resembling Whole Foods Market. Evidently the FTC does not appreciate the many benefits for consumers of the proposed merger, including our plan to invest capital in and improve many of the stores currently owned by Wild Oats."
Competition has also increased from farmer's markets and home-delivered-box schemes. "While we disagree with the FTC's position and believe it is without legal and factual merit, we are confident that, once presented with the facts, the court will agree that this merger is pro-competitive," stated Wild Oats Chairman and CEO, Greg Mays.
The FTC antitrust lawsuit will argue that the marketplace in question is confined to natural and organic food outlets, and that supermarkets should not be considered. "If Whole Foods is allowed to devour Wild Oats, it will mean higher prices, reduced quality, and fewer choices for consumers," FTC competition bureau chief Jeffrey Schmidt said.
Whole Foods recently committed to a Fair Trade ingredients sourcing scheme and opened its first UK superstore in Kensington, London. Whole Foods has 195 stores in Canada, the US and the UK and turned over $5.6 billion in 2006, while Wild Oats has 110 stores in the US and Canada with annual sales of $1.2 billion.