Natural Foods Merchandiser

Mackey: "Free Whole Foods"

By David Accomazzo and Jylle Lardaro

Whole Foods Market filed a federal lawsuit against the Federal Trade Commission Monday claiming the agency has violated the corporation's due process rights in its attempt to reverse the company's 2007 acquisition of natural grocer Wild Oats.

"Let us go about our business," Whole Foods Chief Executive Officer John Mackey said during a conference call given to reporters Tuesday, adding: "Free Whole Foods."

The FTC has fought to keep the two companies separate since news of the deal became public and continued to do so even after its efforts spilled into federal court, where a federal judge gave the merger a green light. The FTC appealed the decision, and the appeals court ruled in the FTC's favor. In September, the FTC set a new administrative hearing for Feb. 16, 2009.

Whole Foods' lawsuit contends that the FTC has prejudged the case, making an impartial hearing impossible. Whole Foods is seeking an injunction to kill the FTC hearing and make its case before a federal court, where the company argues it would receive a fair trial.

"The litigation is specifically to address the process," said Whole Foods attorney Stephen Cannon, co-counsel on the lawsuit.

Whole Foods says the FTC's failure to use qualifying words while describing the merger is a sign of bias.

The FTC says the merger is anticompetitive and they didn't use qualifiers such as maybe, probably or likely, Lanny Davis, Whole Foods' attorney, said in a conference call on Tuesday. "This case is about the FTC being the judge and the jury on a case they've already decided a verdict on."

The FTC did not immediately return a phone call seeking comment.

Another due process violation described by Whole Foods is that the FTC is forcing Whole Foods to rush to trial, forcing the company to defend itself in 29 jurisdictions with only five months to prepare.

Whole Foods officials denied the merger violated antitrust rules.

"I've been in the business 30 years, and I've never seen a more competitive marketplace," Whole Foods Co—President and Chief Operations Officer Walter Robb said.

"There's only one place Whole Foods has a monopoly," Mackey said, "and that's in the imagination of the FTC."

To prove the merger did not create a monopoly, Whole Foods subpoenaed 96 companies for proprietary information, including two years' worth of weekly store sales figures, any internal communications referencing the Whole Foods/Wild Oats deal, and all plans for expansion or renovation relating to natural and organic merchandise. At least one company has objected to handing its business plans over to the lawyers of a rival and has fought the subpoena.

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