Natural Foods Merchandiser

Whole Foods faces more lawsuits

Litigation continues for Whole Foods Market over its acquisition of Wild Oats Markets. The Austin, Texas-based natural foods chain is being sued by a developer and faces more legal action from the Federal Trade Commission.

Still trying to convince the courts that Whole Foods' purchase of Wild Oats last August violates antitrust laws, the FTC has filed a brief seeking to keep Whole Foods from closing any more Wild Oats stores or converting them to Whole Foods stores.

The FTC filed the brief Jan. 14 with the U.S. District Court in Washington, D.C. It claims the courts made "serious, substantial" errors when considering the evidence last summer in the FTC vs. Whole Foods case. The FTC lost that case and a later appeal. The 60-page Jan. 14 brief lists legal errors the FTC believes the courts made, and charges judges with ignoring statements and documents from Whole Foods and Wild Oats detailing how competition would be reduced if the two grocery chains merged. The evidence the courts did rely on consisted largely of "made-for-litigation declarations," the FTC alleged.

Whole Foods has also been sued by Macerich Co., a Santa Monica, Calif.-based developer that owns the Twenty Ninth Street shopping center in Boulder, Colo. Wild Oats was scheduled to anchor the center with a 40,000-square-foot store. The store, which was designed to be Boulder-based Wild Oats' flagship with many state-of-the-art features, was required by its lease to open before July 22, 2007, five months after Whole Foods announced its proposed acquisition of Wild Oats. Despite appearing ready to open, the store still sits vacant today.

Wild Oats officials said the store didn't open because of operational concerns, a claim that Macerich says is false. According to the Boulder Daily Camera, Macerich's January lawsuit alleges that Whole Foods interfered with "Wild Oats' performance of the lease," which has "injured other shopping center tenants by eliminating an anchor tenant operating a specialty grocery store, and the Boulder community by eliminating competition." Macerich has already been sued by one of the shopping center's tenants, alleging that foot traffic was less than what the developer promised.

According to the Camera, the Macerich lawsuit against Whole Foods cites an FTC claim that Whole Foods would avoid more than $150,000 in sales losses per day at its Boulder store if it prevented the new Wild Oats store from opening.

The Macerich lawsuit is in response to a Wild Oats' lawsuit against Macerich. Oats wanted to sublease the unopened store to Sports Authority, but Macerich refused. According to the Camera, Macerich attorneys said that during lease negotiations in the summer of 2005, Macerich made it clear to Wild Oats' officials that the mall was designed to have a grocery store anchor, and Macerich promised other tenants the mall would include a specialty grocery.

Macerich is asking that Whole Foods/Wild Oats either open a specialty grocery in the space, or lease it to a company that will do so for at least five years.

Whole Foods, in keeping with its policy not to talk to the trade press, did not comment.

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