Sunday, 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

Whole Foods Market, Inc. has recently hired a "who's who" of Washington D.C. legal talent, political insiders and heavy hitter lobbyists to help it do battle against the U.S. Federal Trade Commission (FTC).

Here's the list of the key players:

Washington D.C. lawyers:

Lanny Davis. Davis is a highly-connected Democrat in Washington D.C. He's what's often referred to as a "Washington lawyer," that unique breed of attorney who works as much within the halls of Congress and the federal alphabet soup of agencies as they do in the courtroom, if not more so.

Davis is the former legal council for President Bill Clinton and Senator and former First Lady Hillary Clinton, who President-elect Barack Obama will nominate to be his Secretary of State. Whitewater, Troopergate. Impeachment. Lanny Davis was there for the Clintons for all of those and more.

Davis, who went to Law School with Hillary Clinton, was one of her chief fundraisers and advisers during her 2008 run for the Democratic party nomination for President.

Davis is a major Democratic party insider and player. For example, just days after his close friend Senator Clinton was defeated by Barack Obama, Davis was the first key Hillary supporter to call for unity and throw his "full support" behind then Democratic candidate Obama.

Davis also lead the charge, appearing on CNN and Fox News and writing op-ed pieces in major newspapers, suggesting Senator Clinton would be a good choice for Vice President. President-elect Obama chose Delaware Senator Joe Biden for the position instead. But he did choose Senator Clinton as his Secretary of State, a position many say will be far better for her than if she was chosen as Vice President-elect.

Theodore Olsen. Know as Ted Olson is Washington D.C., the Republican lawyer is consider a legal scholar as well as a supreme trail lawyer.

Olsen was the former solicitor general of the United States during the first term of the current Bush Administration. He also was considered by President Bush for a seat on the U.S. Supreme Court. However the President choose John Roberts (Chief Justice) and Sam Alito instead.

Olsen is a highly connected Republican, both inside the Bush White House and among Republicans in Congress. He's also a highly respected trial lawyer who has argued numerous cases before the U.S. Supreme Court.

It is Ted Olson who is behind the strategy of issuing subpoenas to the 96 natural products in the markets where the FTC claims Whole Foods exercises anti-competitive power. The strategy is to demonstrate that there is plenty of competition out there by using the sales and financial data provided by the retailers to help prove the argument.

Ted Olsen will argue for Whole Foods before the FTC at the February 16 hearing.

Lanny Davis is focusing more on the lobbying and political aspects of the case, attempting to build support for Whole Foods' position among influential Democrats -- and he is on a first name basis with most of them.

Lobbying Firm

In mid-November Whole Foods Market, Inc. hired its first lobbying firm — one with deep Democratic ties — to raise support in Congress in its fight with the FTC over its acquisition last year of Wild Oats Market, Inc.

That lobbying firm, the Glover Park Group, is filled with heavy hitters of both parties. The firm has assigned two of its top lobbyists to build support for Whole Foods against the FTC among members of Congress.

The two lobbyists heading up the Whole Foods effort for the firm are Joel Johnson, a former aid in the Bill Clinton White House, and Kim James, a former aid to former Florida Senator Bob Graham.

With an incoming Democratic President and Democratic majorities in the House and Senate, it makes sense for Whole Foods to hire a heavily Democrat-connected firm like Glover Park Group.

Here's what Whole Foods Market spokesperson Kate Lowrey said recently about the retailer's lobbying efforts: "Whole Foods Market is meeting with members of Congress to make them aware of FTC procedures that violate the company’s due process rights as the commission attempts to unwind the year-old Whole Foods-Wild Oats merger."

We've also learned Lanny Davis is making key members of President-Elect Obama's transition team well aware of the issue with the FTC. We were told recently he even had Whole Foods Market gift packages delivered to a couple of such members along with position papers.

Some background: In June 2007, the FTC filed a motion in the U.S. District Court for the District of Columbia to block the merger. The commission’s complaint said that Whole Foods’s purchase of Wild Oats gave the company a monopoly in the organic food market. The supermarket chain disagreed, saying other stores like Wal-Mart, Safeway Stores, Publix, Wegmans and others sell organic food too.

We've made a similar argument on the Blog. Our position is that between the numerous multi-store and single store natural products retailers and the vast number of supermarket chains heavily in the natural and organic category space, coupled with its post-merger struggles, Whole Foods Market presents no anti-competitive position vis-a-vis other retailers in the U.S.

The FTC lost its original complaint against Whole Foods in district court but won a reversal on appeal to the U.S. Court of Appeals in the District of Columbia earlier this year. As a result, the FTC reopened its administrative case against the merger and has set a trial hearing before an administrative law judge for February 16, 2009 in Washington D.C.

If the administrative law judge decides against Whole Foods, the company can make its case before the full commission and then appeal the case to appellate court if the merger is denied by the FTC.

The merger is near-completed by Whole Foods, and it argues that reversing it now would do serious harm to the company.

Whole Foods is also lobbying against new rules proposed by the FTC that set tighter time limits on adjudication of merger complaints. The commission said the time and expense to argue before the FTC was having the effect of discouraging companies from merging.

Whole Foods' lawyers have argued that the new rules will leave little time for companies to answer FTC questions, and could therefore jeopardize merger plans.

The battle is just beginnning to heat up.

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