Natural Foods Merchandiser

FTC sets date for Whole Foods/Wild Oats hearing

by David Accomazzo

The Federal Trade Commission continues with dogged determination trying to put a stop to the Whole Foods/Wild Oats merger and has set a date for Feb. 16, 2009, for a new administrative hearing to try and kill the deal — even though the merger already completed in August 2007.

The FTC has fought the merger almost since it was announced, saying the companies would violate antitrust laws if allowed to merge. A federal judge in Washington, D.C. threw out the FTC complaint in August 2007, allowing the $565 million merger to proceed.

The FTC filed an appeal of the decision one month later, and last July, a federal appeals court ruled that the lower court judge had failed to consider the deal's impact on consumers when he threw out the complaint, according to news reports.

"It's like trying to un-pop popcorn," said columnist Kevin Coupe, who has vociferously opposed the FTC's action since last year.

"I just think they're crazy. I think they're certifiable at this point," Coupe said. "The only thing I can imagine is that the guys at the FTC don't have a clear understanding of how the grocery store industry operates."

The move left natural foods industry analyst Scott Van Winkle shaking his head, calling the FTC's action "absurd."

"Whole Foods Market, relative to the whole industry, is a small part of the market," Van Winkle said. "Everybody sells natural and organic foods today."

And Whole Foods has not been without other financial troubles. Dealing with rising operating costs and tighter consumer spending, the company plans to reduce the square footage of new stores by more than 20 percent, hoping to lower operating costs and boost slagging profit margins, reported. The company hit another roadblock after having to pull the plug on its "Real Deal" marketing slogan after a lawsuit from rival Stop & Shop Supermarket Co., which had started using the phrase almost a month earlier. In addition, stock prices have fallen so dramatically to the point where the FTC's announcement barely dented the company's stock price.

"At this point, Whole Foods shares are pretty washed out. The shares are down from $60 to $19, expectations are low, consumer confidence is down," Van Winkle said. "There wasn't much stock price to lose."

With competition coming from big-box chains to other natural foods grocers, Coupe thinks Whole Foods has enough on its plate.

"It's silly to say (the merger's) anticompetitive," he said. "The FTC's like a rabid dog with a hunk of raw meat."

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