Natural Foods Merchandiser

Federal appeals court dismisses Whole Foods' lawsuit against the FTC

In a ruling briefer than the menu at Whole Foods juice bar, a three-judge panel of the United States Court of Appeals for the District of Columbia denied a motion by the natural grocer against the Federal Trade Commission on Friday. The motion had requested a delay in an administrative trial that would decide whether or not the company's 2007 merger with Wild Oats needs to be undone.

Since that merger, the story has seen more twists than an organic challah from the store's bakery. In June 2007, the FTC asked a federal court to temporarily block the acquisition, claiming it would substantially lessen competition or tend to create a monopoly in the relevant product market, "premium, natural and organic supermarkets," in 18 cities. Whole Foods argued that its competition is far broader than that narrow product market, and includes all supermarkets — including conventional mass market grocers.

Whole Foods sued the FTC in December, claiming it violated its due process rights. The company re-filed the case in January in the U.S. District Court of Appeals to get an expedited decision. Friday's motion essentially dismisses the company's lawsuit against the FTC.

Earlier this month, Whole Foods filed an emergency petition with the federal court of appeals, asking that court to decide on its lawsuit, to remove the FTC from the case and stop the April 6 administrative trial. On Jan. 12, the U.S. Federal Trade Commission asked a judge to halt all integration activities between Whole Foods Markets and Wild Oats.

"Basically, Whole Foods will have to move forward with the administrative hearing," says Los Angeles-based antitrust lawyer Heather Cooper of Sheppard, Mullin, Richter & Hampton LLC. "The FTC, meanwhile, seems like it's going forward full force. Both parties are deeply entrenched. This is pretty dramatic."

The FTC does not comment on active litigation. Lanny Davis, lead attorney for Whole Foods, told the Associated Press that the company is considering re-filing the case or reframing its request for relief: "While it looks like we are caught in a procedural loop, there is no question our due process and equal protection rights have been violated and we intend to pursue this case until we can get a hearing in a federal court about those violations."

The FTC trial is scheduled to begin on April 6.

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