Monday, April 6, 2009

Retail Memo: David Wales, Who Headed Up the FTC's Nearly Two Year Legal Challenge Against Whole Foods' Acquisition of Wild Oats is Leaving the Agency


FTC v. Whole Foods Market, Inc.: Settlement Agreement Post-Mortem

David P. Wales, the Acting Director of the U.S. Federal Trade Commission's (FTC) Bureau of Competition, and the man who in that role spearheaded the nearly two year antitrust legal challenge by the regulatory agency against Whole Foods Market, Inc.'s acquisition of Wild Oats Markets, Inc., is leaving the FTC to, as they say, pursue other interests.

Mr. Wales' departure comes just one month after the FTC and Whole Foods Market reached a settlement agreement over the Austin, Texas-based natural grocery chain's 2007 acquisition of Wild Oats Markets, its then main rival in the natural foods retailing class of trade segment.

New FTC Chairman Jon Leibowitz offered some strong praise about the departing Acting Director of the FTC's Bureau of Competition, which among other tasks is charged with enforcing antitrust regulations and bringing charges of antitrust violations involving mergers and acquisitions, saying about Mr. Wales: "Dave has done a terrific job in leading the Bureau of Competition during an active period of antitrust enforcement and a successful time for the agency in court. American consumers owe him a debt of gratitude, and all of us at the Commission are grateful that Dave agreed to stay on to help ensure a smooth transition."

Chairman Leibowitz's comment about Wales' staying on has to do with the fact that he was the Bureau of Competition's Acting Director.

Mr. Wales joined the FTC in April 2006 as Deputy Director of the Bureau of Competition.

As Acting Director of the competition bureau since August 2008, he has supervised nearly 300 lawyers and staff in the merger and non-merger enforcement divisions and led the bureau in bringing more than 20 enforcement actions, according to Chairman Leibowitz.

According to the FTC's public affairs office, David Wales directed several litigated enforcement efforts that blocked proposed corporate mergers in CCS/Newpark Environmental Services, Oldcastle/Pavestone, and CCC/Mitchell.

In CCC/Mitchell, the Bureau obtained the first preliminary injunction order from a district court in nearly seven years.

Wales also led the Bureau in challenging several consummated mergers in court, including Polypore/Microporous and Ovation Pharmaceuticals, both of which are still pending, and he oversaw the continuing litigation and subsequent March 6, 2009 settlement involving Whole Foods/Wild Oats.

He also helped lead the FTC in obtaining important relief for consumers in other merger matters, including Reed Elsevier/ChoicePoint, Fresenius/Daiichi Sanyo, Dow/Rohm & Haas, King Pharmaceuticals/Alpharma, Hexion/Huntsman, Teva/Barr Pharmaceuticals, Herff Jones/American Achievement, Getinge/Datascope, and Lubrizol/Lockhart, according to the FTC's public affiars office.

Additionally, according to the public affairs office, in the anticompetitive conduct area, Mr. Wales oversaw the Bureau’s two lawsuits against pharmaceutical firms that entered into exclusion payment agreements – Cephalon and Solvay Pharmaceuticals.

The departing head of the competition bureau also helped lead the FTC in obtaining critical relief for consumers in other conduct matters in the health care, retail, consumer product, and real estate industries, including Dick’s Sporting Goods, Boulder Valley Independent Practice Association, AllCare IPA, Inverness, ESL Partners/ZAM Holdings, West Penn MLS, National Association of Music Merchants, and Bristol-Myers Squibb, the FTC says.

Further, in the energy sector, Mr. Wales oversaw several regional gas price investigations, as well as the Commission’s rulemaking to prohibit market manipulation in the petroleum industry, according to the FTC Office of Public Affairs.

David Wales' departure in many ways helps turn the page on the FTC v. Whole Foods Market, Inc. legal case and overall issue. As the Assistant Director of the Bureau of Competition in 2007 Mr. Wales played a major role in the FTC's challenging Whole Foods' acquisition of Wild Oats Market's in 2007.

And as the bureau's Acting Director since August 2008, Mr. Wales was in-charge of the FTC's legal challenge against the deal until the settlement agreement was reached on March 6 of this year.

The first page-turner at the FTC was the naming in late February, 2009 by President Obama of then FTC Commissioner Jon Leibowitz as the regulatory agency's new Chairman. Just a couple weeks after Mr. Leibowitz took over as the FTC's new Chairman, the agency reached the March 6 settlement agreement with Whole Foods Market, Inc., as we reported and wrote about in this piece: Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge.

Take our word for it, that timing wasn't accidental. The fact a settlement agreement was reached so soon after Chaiman Leibowitz assumed his position involved more cause than effect in turns of the settlement deal getting done. Chairman Leibowitz is a registered Democrat but was appointed an FTC Commissioner by Republican President George W. Bush. [Suggested reading: Retail Memo - Breaking: FTC Commissioner Jon Leibowitz Odds On Favorite to Be Named Chairman; Positive Development For Whole Foods' Settlement Talks.]

FTC Chairman Leibowitz has yet to announce who will replace David Wales as the competition bureau's chief. However, we expect the Chairman's choice to be a person who is proactive and strong on antitrust actions, as well as consumer protection issues. Mr. Leibowitz has said he plans strong enforecemnet of both antitrust, competition and consumer protection during his tenure at the FTC.

Meanwhile, perhaps the FTC, as a gesture of good will, should have one of the Washington, D.C. Whole Foods Market stores provide the food and drink, paid for by taxpayers of course, for David Wales' retirement party from the regulatory agency.

After all, it at least would be a small gesture in terms of giving Whole Foods Market, Inc. and its shareholders a little cash back towards the about $30 million the natural grocery chain spent defending the company against the taxpayer-financed, wrong-headed, nearly two-year false premise-based antitrust challenge to Whole Foods' acquisition of Wild Oats, which tried as it might in 2006-2007 to find a buyer, but couldn't until Whole Foods Market, Inc. came along.

It's just a thought.

Reader Notes:

>Natural~Specialty Foods Memo (NSFM) predicted that the settlement agreement between WHole Foods Market, Inc. and the FTC would have as its central proposition or condition the divestment and sale of certain stores by Whole Foods. We were correct. You can read an overview piece about it here: Retail Memo: The FTC-Whole Foods Market Settlement Agreement Looks Much Like Our January 'Blueprint-Template For A Settlement Deal' Proposal
>Follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.

>Below is a linked bibliography to Natural~Specialty Foods Memo's (NSFM) coverage and analysis of FTC v. Whole Foods Market and related issues and topics.

FTC v. Whole Foods Market, Inc. Recent Bibliography

Post March 6, 2009 Settlement Agreement:
March, 2009:

Daily Memo: Countdown to March 6, 2009: >Read our Thursday, March 5, 2009 Daily Memo at the link: [Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge]>Read our Wednesday, March 4, 2009 Daily Memo at the link: [Daily Memo - Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6]>Read our Tuesday, March 3, 2009 Daily Memo at the link: [Daily Memo - Whole Foods Market - FTC - Settlement Deal Watch - Countdown to March 6]>Read our Monday, March 2, 2009 Daily Memo at the link: [Daily Memo - Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6]>Read our Friday, February 27 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6]

February, 2009:

February 24, 2009: Retail Memo - Breaking: FTC Commissioner Jon Leibowitz Odds On Favorite to Be Named Chairman; Positive Development For Whole Foods' Settlement Talks.... February 22, 2009: Retail Memo: The 'Whole Analysis' - Whole Foods Market Inc's First Quarter Financials, FTC v. Whole Foods...The Natural Grocer At Home and Abroad....February 11, 2009: Retail Memo: 'God And Man at Yale' - The FTC-Whole Foods Settlement Talks: Whole Foods CEO John Mackey Speaks Out at Yale University....February 5, 2009: Retail Memo - Breaking: FTC Delays Whole Foods Merger Opposition Case Another 30-Days For Settlement Talks; Progress Towards A Deal Remains Positive....February 3, 2009: Retail Memo - Breaking Developments: FTC, Whole Foods Market, Inc. Progressing in Settlement Talks; Could the Negotiated End-Game Be Near?....February 1, 2009: Promotional Merchandising Memo: Whole Foods Market's Super Bowl In-Store Promotional Merchandising Message: 'Value'.

January, 2009:

January 31, 2009: Store Brands - Private Label Memo: Smart & Final-Owned Henry's Farmers Market Preparing to Debut New Natural & Organic 'Sun Harvest' Store Brand....January 29, 2009: Retail Memo - Breaking: Whole Foods Makes Settlement Offer to FTC; FTC Halts Action For 5 Days; Natural~Specialty Foods Memo Calls For A Settlement....January 25, 2009: Retail Memo: Judge Sets February Hearing Dates On FTC Motion That Could Result in Whole Foods Market Having to Rebrand 100 Former Wild Oats Units....January 24, 2009: Retail Memo: Despite its Battle With the FTC and Other Struggles, Whole Foods Market Still Ranked 22nd 'Best Place' to Work in America By Fortune....January 24, 2009: Retail Memo - News & Analysis: Gelson's Chain Challenges Whole Foods' Subpoena For Trade Secrets; FTC Says No Like it said to New Seasons Market....

January 23, 2008: Retail Memo: Three Judge Federal Appeals Court Panel Rules Against Whole Foods' FTC Lawsuit Today; What's Next?.... January 21, 2008: Retail Memo: An Argument in Favor of the FTC in FTC v. Whole Foods Market, Inc. -- Or At Least Against Whole Foods' Legal Tactics....January 19, 2009: Retail Memo: Concerned With Fast-Looming FTC Hearing Date Whole Foods Re-Files Lawsuit Taking it Directly to Washington, D.C. Federal Appeals Court....January 19, 2009: Retail Memo - Breaking News: Portland's New Seasons Market and Whole Foods Market, Inc. Reach Agreement; New Seasons Will Provide Trade Secrets....January 16, 2009: Read Memo: Colorado Newspaper Columnist Joins NSFM's 'Whole Foods Market Isn't A Monopoly' Bandwagon....

Friday, January 16, 2009: Retail Memo - Exclusive: Supermarket Industry Investor Ron Burkle Looking For A Seat On Whole Foods Market's Board of Directors....Thursday, January 15, 2009: Retail Memo: Natural-Organic Foods and U.S. Retail Marketplace Realities; Why the FTC's Case Against the Whole Foods-Wild Oats Merger is Pure Folly....January 15, 2009: Retail Memo: Fresh & Wholesome Market Fears Not A Whole Foods Market Monopoly; In Fact Part of its Competitive Strategy is to Be the Anti-Whole FoodsRetail Memo: Whole Foods Offers Carrot and Stick to Retailers That Have Yet to Comply to Subpoena For Trade Secret Data and Information.

December, 2008:

December 29, 2008: Retail Memo - Breaking News: New Seasons Market Doesn't Turn Over Trade Secrets to Whole Foods Market Despite Deadline to Do So Being Today....December 29, 2008: Independent Grocer Memo: Natural-Organic, Local, Fresh and Premium Keys to Pacific Northwest USA's Haggen Foods; Now Adding Value....December 28, 2008: Retail Memo: Web Site and Blog-Driven Viral Boycott of Whole Foods Market Stores in Portland, Oregon Region Going On; Could it Intensify?....December 28, 2008: Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel....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 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.

Natural~Specialty Foods Memo (NSFM) Archive Bibliography

FTC v. Whole Foods - Linkage from the NSFM 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. You can search the archives using the "search" function at the top of the Blog as well.

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