Whole Foods Market, Inc., New Seasons Market, and the Subpoenas
Tomorrow (December 29, 2008) is the deadline Federal Trade Commission (FTC) Administrative Law Judge Michael Chappell has given nine-store Portland, Oregon natural foods grocer New Seasons Market to turn over its trade secrets to lawyers for Whole Foods Market, Inc. [Here's a link to the ruling.]
As Natural~Specialty Foods Memo reported on December 17 in this story [Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets], the FTC Administrative Law Judge ruled against New Seasons' appeal of the Whole Foods' subpoena, ordering the natural grocer to submit its sales, financial and other proprietary information called for in the subpoena to Whole Foods' lawyers by tomorrow.
The next day, December 18, we reported in this piece [ Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Grocer Must Turn Over Trade Secrets to Whole Foods Market], that Brian Rohter, the CEO of New Seasons Market, said he was huddling with his lawyers following the Administrative Law Judge's ruling, looking for ways to continue fighting the subpoena.
As of Friday, December 26, New Seasons hadn't filed any formal legal appeal to the FTC, according to our sources; nor have we been able to find anything legally filed.
Therefore, tomorrow is S (subpoena) Day for Portland's New Seasons Market. The natural foods retailer can either comply with the judge's order and submit its trade secrets to Whole Foods' lawyers, which is something CEO Rohter has been strongly against doing, or it can join a number of the other 92 natural products retailers issued subpoenas and not comply with the legal documents. As we reported here, as of last week only about 50 of the 93 retailers issued subpoenas by Whole Foods Market, Inc. have complied. The deadline to do so was November 4, 2008.
Portland's New Seasons Market is the only one of the 93 retailers to date that has publicly opposed the subpoenas and filed an appeal with the FTC. The others who haven't complied have done so silently, merely refusing to submit the information. Additionally, a number of the 93 natural products retailers that have complied with Whole Foods' subpoena for their trade secrets, have self-edited the information submitted, thus only partially complying with the demands made in the legal documents.
Since New Seasons is the only one of the 93 retailers to oppose the subpoenas and take a public stand in doing so, it is flying above the radar (the others that haven't complied are flying below the radar screen in terms of visibility on the issue) in terms of its decision tomorrow. There are certain negatives as well as certain benefits of doing so.
Most of these 93 natural products retailers are privately-held companies like New Seasons Market is. As such, they aren't required to publicly disclose annual sales and profit information, which the Whole Foods subpoena calls for.
But the subpoena calls for far more than this data. It also demands the retailers locate, make copies of, and submit to Whole Foods' any internal company e-mails that might discuss competitive issues as they relate to Whole Foods Market, Inc. in each of the 93 retailers' respective markets.
In addition, the Whole Foods' subpoena demands the retailers disclose in writing their respective strategic plans, including any new stores they plan to open in the next few years.
Whole Foods says obtaining this information is essential in order for it to demonstrate that a combined Whole Foods-Wild Oats is not a monopoly in any U.S. Market.
Late last week, New Seasons Market CEO Brian Rohter indicated the natural foods grocer might have something more up its sleeve in terms of continuing to fight the demands made in the subpoena.
We should know tomorrow. Stay tuned.
FTC v. Whole Foods Market - Whole Foods Market v. FTC: Recent coverage and analysis in Natural~Specialty Foods Memo (NSFM):
December 24, 2008: Christmas Eve Memo 2008: 'Twas the Night Before Christmas' - FTC v. Whole Foods Market, Inc. Version....December 24, 2008: Independent Grocer Memo: From Mrs. Gooch's to the Auto Body Business, Then Back to Retail, Chris Kysar is On A Healthy Organic Foods Retailing Roll....December 24, 2008: Retail Memo: It's 'Deja Vu All Over Again' - Judge Paul Friedman to Whole Foods Market, FTC: 'What's My Role Here?'....December 23, 2008: Retail Memo: FTC Postpones Scheduled February 16 Administrative Hearing on Whole Foods-Wild Oats Deal Break-Up Until April 6, 2009....December 23, 2008: Independent Grocer Memo: National Grocers' Association Asks President-Elect Obama to Look Out For Independent Grocers When He takes Office in January....
December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied.... December 22, 2008: Retail Memo: Whole Foods Market Wants to Depose and Obtain Internal E-Mails From FTC Commissioner, Suggesting Possible Conflict of Interest Situation....December 22, 2008: Retail Memo: At Hearing Today Judge Tells FTC to Provide Road Map of How Whole Foods Could Take About Merged Companies Should Ruling Go In its Favor....
December 19, 2008: Retail Memo: Whole Foods' Lobbying Effort Baring More Fruit - House Committee Leaders Send Letter to FTC Chair Similar to One Sent By Senate Leaders.... December 18, 2008: Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market.... December 18, 2008: Retail Memo: The 'Whole Primary Source Scoop' -- FTC and U.S. Federal Court Documents on the FTC v. Whole Foods Market, Inc. Case....
December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets....December 16, 2008: Retail Memo: Whole Foods, Wild Oats and Boulder, CO...And the Rocky Mountain News' Editorial Take On FTC v. Whole Foods Market, Inc....December, 15, 2008: Retail Memo: Eight Members of U.S. Senate Judiciary Committee Send Letter to FTC Chairman Regarding FTC's Legal Case Against Wild Oats' Acquisition....December, 13, 2008: Retail Memo - Analysis & Commentary: More On FTC v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC....
December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Likley With Mass Market Lift....December 9, 2008: Retail Memo: Whole Foods Markets' 'Whole Legal Paycheck:' Three Top Washington, D.C. Law Firms Teaming Up On The Natural Grocery Chain's FTC Lawsuit....December 9, 2008: Retail Memo: Whole Foods Market CEO John Mackey and Team Launch First Aggressive Attack Against the FTC's Legal Case at Press Conference This Morning....December 8, 2008: Retail Memo: Mr. Mackey (and the Whole Foods Market Troops) Goes to Washington....
December 8, 2008: Retail Memo: Breaking News - Whole Foods Market, Inc. Files Lawsuit Against the FTC; Argues the Regulator Violated the Company's Due Process Rights....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data....December 7, 2008:Retail Memo: Whole Foods Market Retains Top Washington D.C. lawyers and Politically-Connected Lobbyists to Plead its Case Against the FTC....
December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas....December 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....
December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.
FTC v. Whole Foods - Linkage from the Natural~Specialty Foods Memo archives:
Click here, here and here for stories about the FTC-Whole Foods issue from our archives, including pieces about mass market and natural foods class of trade retail competitors.