Natural Foods Merchandiser

FTC sets date for Whole Foods/Wild Oats hearing

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

Aside from the merger, Whole Foods has not been without financial troubles. Dealing with rising costs and tighter consumer spending, the company plans to reduce the square footage of new stores by more than 20 percent, reported. The company had 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. Stock prices have fallen so dramatically, the FTC's announcement barely dented them.

"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.

With competition coming from big-box chains and other natural foods grocers, Coupe said he 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."

Natural Foods Merchandiser volume XXVIII/number 11/p. 21

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