Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge

FTC v. Whole Foods Market, Inc. - Settlement Deal Reached

Whole Foods Market, Inc. and the U.S. Federal Trade Commission (FTC) have reached a settlement agreement deal in the FTC antitrust case against Whole Foods' 2007 acquisition of Wild Oats Markets, Inc., doing so on the last day in which the FTC had agreed to halt its legal proceedings in the case.

Below (in italics) is what we said yesterday in this piece [ Daily Memo: Whole Foods Market - FTC - Settlement Deal Watch - Countdown to March 6] about the down-to-the-wire settlement negotiations between Whole Foods Market, Inc. and the FTC:

"The FTC imposed the halt last month after Whole Foods brought an offer of settlement to the U.S. Federal Government agency responsible for antitrust enforcement and consumer protection.

According to our sources, the Whole Foods market settlement offer included the selling of a certain number of former Wild Oats stores now converted to the Whole Foods' brand in some of the 29 U.S. markets where the FTC claims a combined Whole Foods-Wild Oats is a monopoly in what the FTC calls the "premium natural and organic retailing segment (PNOS)."

Natural~Specialty Foods Memo (NSFM) first reported in February, 2009 that the initial settlement offer made to the FTC by Whole Foods, the action that started the settlement talks, included an offer by the natural grocery chain to divest some of the former Wild Oats stores as the key ingredient of a settlement agreement. We are the only publication we can find that reported this.

Today, Whole Foods Market, Inc. announced it has reached a settlement with the FTC over the long legal battle, saying the key element of the settlement involves just what we said it would above, which is the divestiture of a number of stores.

Whole Foods will sell 31 Wild Oats stores and other assets to settle the FTC's antitrust challenge, the natural grocery chain and the government agency responsible for antitrust enforcement and consumer protection said today.

Pursuant to FTC protocol, the settlement agreement has been placed on public record for a 30-day comment period ending April 6, 2009, after which the FTC will issue a final ruling.

The settlement agreement: Under the terms of the agreement, a third-party divestiture trustee has been appointed to market for sale:

~Leases and related assets for 19 non-operating former Wild Oats stores, 10 of which were closed by Wild Oats prior to the merger and nine of which were closed by Whole Foods Market;

~Leases and related fixed assets (excluding inventory) for 12 operating acquired Wild Oats stores and one operating Whole Foods Market store (13 total); and

~Wild Oats trademarks and other intellectual property associated with the Wild Oats stores.

"We are pleased to have reached a mutually-satisfactory agreement with the FTC. We believe it was in the best interests of all our stakeholders to resolve this matter so we can dedicate our full attention to selling the highest quality foods available in our inviting store environments," John Mackey, chairman, chief executive officer, and co-founder of Whole Foods Market," said in a statement today.

"It will be business as usual in the 13 operating stores to be marketed for sale. We are committed to serving our shoppers by continuing to operate these stores in the manner our customers deserve and expect. We will be offering Team Members in stores that are sold the choice of either a guaranteed job offer in another store or an enhanced severance package."

Terms and conditions of the settlement agreement: The divestiture trustee will have six months to market the assets to be divested. For any good faith offers that are not finalized by the divestiture trustee during the six-month period, an extension of up to six months may be granted. This twelve month period may be further extended to allow the FTC to approve any purchase agreements submitted within that time period. The only other obligations on Whole Foods imposed by the settlement agreement are in support of the divestiture trustee process.

According to Whole Foods Market, Inc., after receiving final approval on the terms of the settlement deal by the FTC, which is expected prior to April 30, 2009, the natural grocery chain expects to record a non-cash charge of approximately $19 million or less relating to the potential sale of the 13 operating stores.

These stores had combined sales of approximately $31 million in the first quarter of fiscal year 2009, or approximately 1.3 percent of the Company’s total sales of $2.5 billion, Whole Foods said today.

The natural grocery chain says it will incur some cash expenses relating to legal and trustee fees which are not expected to be material. No material additional charges are expected related to the 19 closed properties, for which a lease liability reserve is already recorded, or related to the trademarks which have been fully amortized.

The addresses for the 13 operating stores offered for sale in the settlement deal are:

7133 N. Oracle Rd., Tucson, AZ
8688 E. Raintree Dr., Scottsdale, AZ
2584 Baseline Rd., Boulder, CO
1651 Broadway St., Boulder, CO
3180 New Center Pt., Colorado Springs, CO
5910 S. University Blvd., Littleton, CO
9229 N Sheridan Blvd., Westminster, CO
340 N. Main St., West Hartford, CT
4301 Main St., Kansas City, MO
1090 St. Francis Dr., Santa Fe, NM
7250 W. Lake Mead Blvd., Las Vegas, NV
19440 N.W. Cornell Rd., Hillsboro, OR
6930 S. Highland Dr., Salt Lake City, UT

[Note that 12 of the 13 operating stores are located in the Western U.S. Only one, the store located at 340 N. Main St., West Hartford, CT, is outside of the western states. This is because the Western U.S. region was the primary U.S. market region the FTC claimed Whole Foods Market held its strongest "monopoly" in, in what the FTC called the "premium natural and organic retailing segment (PNOS)." Also, note the high number of stores in Colorado (5 of the 13), which is where Wild Oats Markets, Inc. was headquartered. No problem there for Whole Foods -- it has two too many stores in Boulder anyway. And the two stores in Boulder for sale are two units Whole Foods has been struggling to decide to keep or dump. It would have likely kept them for political reasons. But now being forced to sell them is actually a blessing in disguse. Want to bet the two Boulder stores were offered up in Whole Foods' initial settlement offer to the FTC?]

The addresses for the 19 non-operating Wild Oats stores offered for sale are:

5350 W. Bell Rd., Glendale, AZ
1422 N. Cooper Rd., Gilbert, AZ
874 E. Warner Rd., Gilbert, AZ
9028 W. Union Hills, Peoria, AZ
13823 N. Tatum Blvd., Phoenix, AZ
15569 W. Bell Rd., Surprise, AZ
200 W. Foothills Pkwy., Fort Collins, CO
8194 S. Kipling Pkwy., Littleton, CO
6424 Naples Blvd., Naples, FL
4600 Shelbyville Rd., St. Matthews, KY
87 Marginal Way, Portland, ME
8819-8833 Ladue Rd., St. Louis, MO
7831 Dodge St., Omaha, NE
517 N. Stephanie St., Henderson, NV
4879 S. Virginia St., Reno, NV
5695 S. Virginia St., Reno, NV
2077 N.E. Burnside St., Portland, OR
17711 Jean Way, Lake Oswego, OR
3736 W. Center Park Dr., West Jordan, UT

[Note that 15 of the 19 non-operating stores are located in the Western U.S., with only four stores outside the market region. The reason for this is the same as above.]

Some head-scratching in order

This is a reasonable settlement deal for both parties, in our analysis, although since we've argued beginning in 2007, right after the FTC issued its legal challenge against Whole Foods Market's friendly acquisition of Wild Oats in 2007, that the FTC's monopoly argument and antitrust action was pure folly, it wasn't a needed deal.

Putting that aside, it is a settlement offer that could have been acheived long ago, saving Whole Foods Market, Inc. (and its shareholders) millions of dollars in legal fees, and saving the American taxpayer a likely equal amount in expenses incurred by the FTC "on behalf of American consumers," not to mention being able to have focused the FTC's resources in other, more important, areas instead of its aggressive attempt to overturn the deal.

But at least its a settlement, something we called for months ago.

And it could actually be a positive one in some respects for Whole Foods, particularly the solution to the two Boulder, Colorado stores (two of the 13 operating stores to be sold), and the selling of the six closed stores in Arizona, which is a market region that's overstored, and in which grocers are suffering seriously because the state has been hit so hard by the housing foreclosure mess, financial crisis and economic recession. The grocers suffering the most in Arizona are upscale retailers like Whole Foods market and others.

Additionally, the settlement deal really amount to Whole Foods Market only having to sell 13 stores, since the 19 stores already have been closed and the natural grocery chain would love to sell them anyway. That's nothing folks.

But right now, we're going to fix ourselves a cheese plate (artisan of course), along with some organic grapes and whole grain crackers on the side, and pour a glass of bio-dynamically-produced, organic red wine, while we then engage in some focused head-scratching over why, after all these many months of laboring to overturn the deal, the FTC now agreed on a reasonable settlement deal which it should have proposed itself at least one year ago.

But stay tuned, as we have an upcoming analysis piece on the Whole Foods Market, Inc. - FTC settlement agreement coming up.

Background summary: FTC v. Whole Foods Market, Inc.

The FTC challenged Whole Foods Market's August 28, 2007 acquisition of Wild Oats Markets, Inc. shortly after the two companies announced the deal.

Prior to completion of the acquisition, the FTC filed a motion in the United States District Court for the District of Columbia seeking a preliminary injunction to enjoin the acquisition. The FTC had also filed a complaint commencing an administrative proceeding challenging the acquisition.

On August 16, 2007, the United States District Court for the District of Columbia denied the FTC’s motion for a preliminary injunction.

The FTC appealed denial of the preliminary injunction motion to the United States Court of Appeals for the District of Columbia Circuit and on July 29, 2008 the Court of Appeals reversed the District Court and remanded the case to the District Court for further proceedings.

On remand, the FTC renewed its motion for preliminary injunctive relief pending resolution of the administrative action, specifically seeking a hold separate order, the rebranding of all former Wild Oats stores, and the appointment of a trustee or special master to establish an independent management team for the former Wild Oats assets and oversee Whole Foods Market’s compliance with the order.

The administrative proceeding was scheduled to commence on April 6, 2009. On January 28, 2009, the FTC issued an order granting Whole Foods' motion to withdraw the administrative case from adjudication for the purpose of considering a proposed consent agreement that would resolve the administrative proceeding. A further order dated February 4, 2009 extended the withdrawal through March 6, 2009.

On March 6, 2009 Whole Foods and the FTC reached a settlement deal.

Daily Memo: Whole Foods Market - FTC - Settlement Deal Watch - Countdown to March 6

FTC v. Whole Foods Market - Settlement Talks

Natural~Specialty Foods Memo (NSFM) is beginning to understand how MSNBC cable news host Keith Olberman must feel each and every night on his program, "Countdown With Keith Olbermann," the format of the show being an hour-long "countdown" of the day's top news stories, now that we've been counting-down the days until March 6, regarding Whole Foods Market's and the FTC's settlement deal negotiations.

And, as the March, 2009 calendar page at the top reminds us in black and white, March 6 is almost here.

Today, Thursday, March 5 ended without the U.S. Federal Trade Commission (FTC) and Whole Foods Market announcing a settlement deal had been reached in FTC v. Whole Foods Market, Inc., the regulatory agency's legal case designed to overturn Whole Foods' 2007 friendly acquisition of Wild Oats Markets, Inc.

Tomorrow is the day the FTC has said its temporary halt in legal proceedings regarding the antitrust case will end.

The FTC imposed the halt last month after Whole Foods brought an offer of settlement to the U.S. Federal Government agency responsible for antitrust enforcement and consumer protection.

According to our sources, the Whole Foods market settlement offer included the selling of a certain number of former Wild Oats stores now converted to the Whole Foods' brand in some of the 29 U.S. markets where the FTC claims a combined Whole Foods-Wild Oats is a monopoly in what the FTC calls the "premium natural and organic retailing segment (PNOS)."

If there is an announcement tomorrow, we think it will include one of, or a combination of, the five things detailed below:

>The FTC could announce an extension of its halt in legal proceedings, saying negotiations with Whole Foods are continuing, but that more time is needed. In our analysis, such an extension would likley be for no more than two weeks, because the FTC has set April 6 as the start date for its administrative trial in the antitrust case.

> Both sides could announce that no settlement deal has been reached but they are continuing talks but no extension of the FTC halt.

> One or both sides could announce that no settlement deal has been reached and they will no longer negotiate a settlement.

> Both sides could announce a settlement deal has been reached.

>Both sides could announce nothing. It's Friday, and even if the two parties were to reach a deal they might not announce it on a Friday.

Of course, if there is bad news to announce, they probably will do it tomorrow, since Friday is the favorite day for government agencies, politicians and corporations to announce bad news. It's the end of the week and fewer people pay attention to the news on weekends. The financial markets are also closed on the weekends. So you announce it after the markets close on Friday.

For now, we're going to leave it here. But we will be reporting and offering some fresh analysis tomorrow, Friday, March 6, 2009. Stay tuned.

Daily Memo: Countdown to March 6, 2009

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]

>Read our Thursday, February 26 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 9 Days to March 6]

>Read our Wednesday, February 25 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 10 Days to March 6] [Note: There's a bibliography of recent posts on FTC. v. Whole Foods Market, Inc. from Natural~Specialty Foods Memo (NSFM) at the bottom of the linked column. This is our first Daily Memo on the countdown to March 6.]

Daily Memo - Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6

FTC v. Whole Foods Market, Inc. - Settlement Talks

Today passed without an announcement from the U.S. Federal Trade Commission (FTC) and Whole Foods Market, Inc. as to whether or not the two parties have reached a settlement deal in the ongoing FTC antitrust challenge to Whole Foods' 2007 friendly acquisition of Wild Oats Markets, Inc.

There are now only two days until the FTC's halt of legal proceedings in the antitrust case ends. That halt in legal proceedings ends Friday, March 6.

The FTC could extend the halt if it feels the ongoing settlement talks are progressing, but that all that's needed is more time. Of course, that assumes a settlement deal isn't reached by Friday.

Additionally, April 6 is the date the FTC has set to begin an administrative trial in FTC v. Whole Foods Market, Inc., its antitrust case against the natural grocery chain. That trial will be chaired by an FTC-appointed Administrative Law Judge, who will hear the respective legal arguments from both sides, and then rule on the status of the Whole Foods-Wild Oats merger.

Wild Oats Markets, Inc. no longer exists as a corporate entity. And Whole Foods Market, Inc. has basically fully-integrated Wild Oats' into the Whole Foods Market culture and operating system. Only about 6-10 of the about 100 former Wild Oats stores Whole Foods kept post-acquisition haven't been rebranded under the Whole Foods Market name.

Whole Foods volunteered to not rebrand those remaining stores until there is a resolution to the FT. v. Whole Foods Market antitrust case and issue.

With only two days remaining until March 6, both sides are working hard on reaching a settlement deal.

The countdown clock is ticking faster and faster though.

New FTC Chairman Jon Leibowitz

Meanwhile, as we reported last week, President Obama has named current FTC Commissioner Jon Leibowitz as the new Chairman of the federal regulatory agency responsible for antitrust enforcement and consumer protection.

Leibowitz, a Democrat known to be an antitrust hawk, was named FTC Commissioner by Republican President George W. Bush in 2004. And his appointment to the position by President Obama signals what the President has said will be a significant component of his term as President -- increased regulation, including stronger antitrust enforcement.

As an FTC Commissioner though Leibowitz has signaled a flexibility in being willing to reach a settlement in the Whole Foods-Wild Oats antitrust matter.

Ironically, from the standpoint of the Whole Foods case at least, many legal observers (and Democrats) consider the FTC to have overall been weak on antitrust enforcement during President Bush's two terms.

But in the case of Whole Foods Market's $565 million acquisition of Wild Oats in 2007, the FTC has been an antitrust enforcement hawk, pursuing its attempt to overturn the deal for about 18 months, including appealing federal judge Paul Friedman's original decision in 2008, which gave Whole Foods Market the green light to go forward and integrate the Wild Oats stores into Whole Foods.

A federal appeals court overturned the judge's ruling in favor of the deal last year. That's why the case is where it is today.

This selective antitrust enforcement makes the already bizarre desire by the FTC to overturn the deal even more bizarre.

First off, the natural products retailing industry, with all due respect, is hardly a vital, mainstream business in the U.S. in terms of being an essential way of feeding the majority of Americans. It is vital for other reasons. Maybe 20% (and that's probably a generous estimate) of American consumers purchase all or most of their food and groceries at natural foods class of trade stores, like Whole Foods, the former Wild Oats, Sunflower Farmers Market and others.

Second, the net result of Whole Foods' acquisition has been to add a grand total of about 100 stores to its "retailing empire" of about 279 total stores to date. By contrast, Wal-Mart operates nearly 4,000 stores in the U.S. and Safeway Stores, Inc. about 1,600 in the U.S.

Safeway has just about as many supermarkets (about 260), which merchandise a strong and rapidly increasing selection of natural and organic foods, in just Northern California alone, where it has its corporate headquarters, as Whole Foods has total number of stores in the entire U.S., (about 269; 11 are in the UK and Canada), for example.

Lastly, as we've argued since 2007, the entire premise of the FTC's antitrust action against the deal rests on its argument that a combined Whole Foods-Wild Oats (those about 100 added stores) is a monopoly retailer in 29 U.S. markets, in what the FTC has termed the "premium natural and organic retailing segment (PNOS).

This is pure folly. No serious participant in, or analyst of, the natural-organic foods retailing industry -- and food and grocery retailing in general -- really thinks that's true.

Rather, as we've argued often in Natural~Specialty Foods Memo (NSFM), natural and organic foods retailing in America today is a multi-corporate (and independent), multi-format retailing business. U.S. consumers today are just as likely to buy their natural and organic food and grocery products at Trader Joe's, Costco, Safeway and a host of other stores, as they are to purchase the goods at a store operated by Whole Foods Market, Inc.

So, why the selective antitrust enforcement by the FTC? And why the laser beam-like focus on Whole Foods' $565 million friendly acquisition of Wild Oats (tiny in terms of food retailing industry acquisitions), which in the end added only 100 stores to the natural grocery chains store-count and sales volume bottom line throughout the entire United States?

Additionally, doesn't the FTC realize that Wild Oats board tried to sell the company to numerous grocery chains before Whole Foods came along? That included shopping Wild Oats to Kroger Co, the largest U.S. supermarket chain and the third-largest seller of groceries in the U.S., after number one Wal-Mart and number two Costco? Kroger said no thanks.

We just can't believe the FTC really believes a combined Whole Foods-Wild Oats presents any real monopolistic barrier to Whole Foods Market, Inc.'s competitors, or that it poses a valid consumer protection issue for America's food and grocery shoppers.

We even know one of Whole Foods natural foods class of trade competitors who laughs at the whole Whole Foods as a monopoly concept and FTC argument. Hint: The natural foods chain this person runs is competing head-to-head against Whole Foods Market in numerous market regions in the U.S.

But since there are at least four, fast-growing natural foods chains taking on Whole foods on a regional basis in the U.S. in a big way by opening numerous new stores, your guess as to who the person is isn't so easy.

But the mere fact there are those four natural foods chains doing so should be enough to suggest Whole Foods' competitors, as well as the market in general, doesn't agree with the FTC.

Can you? (Feel free to offer your opinion by using the comments link at the bottom of this post.)

Daily Memo: Countdown to March 6, 2009 (February 25 -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.]

>Read our Thursday, February 26 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 9 Days to March 6.]

>Read our Wednesday, February 25 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 10 Days to March 6. [Note: There's a bibliography of recent posts on FTC. v. Whole Foods Market, Inc. from Natural~Specialty Foods Memo (NSFM) at the bottom of the linked column.]

[You can follow Natural~Specialty Foods Memo (NSFM) around on Twitter.com at: www.twitter.com/nsfoodsmemo.]

Daily Memo - Whole Foods Market - FTC - Settlement Deal Watch - Countdown to March 6

FTC. v. Whole Foods Market, Inc. - Settlement Talks

There was no announcement today regarding whether or not the U.S. Federal Trade Commission (FTC) and Whole Foods Market, Inc. have reached a settlement in their talks over the FTC's antitrust challenge to the natural grocery chain's 2007 friendly acquisition of Wild Oats Markets, Inc.

And, according to our sources, no settlement deal has been reached as of yet.

There are only three days remaining until March 6, the date the FTC has set as the end of its halt in legal proceedings regarding FTC. v. Whole Foods Market, Inc.

The FTC has set April 6, 2009 as the date it will begin an administrative trial in which an FTC-appointed Administrative Law Judge will hear arguments from both sides regarding the antitrust aspects of the 2007 acquisition of Wild Oats by Whole Foods Market, Inc., assuming a settlement isn't reached before then. After hearing the arguments, the judge will offer an administrative ruling on the status of the merger.

Whole Foods Market wants to avoid the April 6 administrative trial, which is why the Austin, Texas-based natural grocer made a settlement offer to the FTC in February. The FTC did not accept that initial offer.

But in response to the offer, which we're told involved Whole Foods Market closing and selling some of the about 100 former Wild Oats stores it now operates, the FTC announced its halt of legal proceedings as a good will gesture so that the two sides could further negotiate a settlement deal.

The FTC halt ends on Friday, March 6. However, the U.S. federal regulatory agency responsible for antitrust issues and consumer protection could extend the March 6 date if it desires.

Natural~Specialty Foods Memo's (NSFM) Countdown to March 6, 2009:

>Read yesterday's (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.]

>Read our Thursday, February 26 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 9 Days to March 6.]

>Read our Wednesday, February 25 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 10 Days to March 6. [Note: There's a bibliography of recent posts on FTC. v. Whole Foods Market, Inc. from Natural~Specialty Foods Memo (NSFM) at the bottom of the linked column.]

[Reader Note: You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at: www.twitter.com/nsfoodsmemo.]

Daily Memo - Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6

It's well-past the end of the business day today, Monday, March 2, and no announcement has come from the U.S. Federal Trade Commission (FTC) and Whole Foods Market, Inc. on if the two parties have reached a settlement agreement to the FTC v. Whole Foods Market, Inc. legal case, in which the FTC is attempting to overturn the 2007 friendly acquisition by Whole Foods of Wild Oats Markets, Inc.

The two parties resumed talks today we're told, following taking the weekend off. Our sources say no settlement agreement has been reached yet.

The FTC has halted its legal challenge against the deal until Friday, March 6 so that the two parties can negotiate a settlement to the long-running FTC challenge.

However, the FTC has set April 6, 2009 as the start date for an administrative trial in which an FTC-appointed Administrative Law Judge will hear arguments on the case from lawyers from Whole Foods Market, Inc. and the FTC. After the hearing portion of the trial is over the Administrative Law Judge will make a ruling on the status of the merger.

The FTC can extend its March 6 halt of legal proceedings if it feels settlement talks between the regulator and Whole Foods are moving in a positive direction and more time is needed to complete the negotiations.

But both the March 6 deadline and the April 6 trial date are fast-looming

Natural~Specialty Foods Memo's (NSFM) Whole Foods - FTC countdown to March 6 series:

>Read our Friday, February 27 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6.]

>Read our Thursday, February 26 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 9 Days to March 6.]

>Read our Wednesday, February 25 Daily Memo at the link: [Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 10 Days to March 6. There's a bibliography of recent posts in Natural~Specialty Foods Memo (NSFM) at the bottom of this column as well.]

Whole Foods Market, Inc. - News & Notes

>Read a recent analysis (February 22, 2009) we did on Whole Foods' first quarter 2009 financial performance and related issues here: [Retail Memo: The 'Whole Analysis' - Whole Foods Market Inc's First Quarter Financials, FTC v. Whole Foods...The Natural Grocer At Home and Abroad.]

Whole Foods Market in the Media

>In the February 22 story linked above we included some analysis about Whole Foods' operations in the United Kingdom. The UK trade publication Retail Week has a story today about Whole Foods Market-UK. You can read it at the link here: Anybody remember Whole Foods Market?

>The Chicago Tribune newspaper has now joined Natural~Specialty Foods Memo's (NSFM) about 20-month argument that the FTC's attempt to overturn the 2007 friendly acquisition of Wild Oats by Whole Foods Market, Inc. is folly. Here is just one of the many pieces in which we've made that argument: [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.]

In the Saturday, February 28, 2009 story the Chicago Tribune writer says: "So here's a bit of unsolicited advice for the FTC: Quit obsessing over Whole Foods Market's acquisition of Wild Oats Markets." Read the entire piece here: FTC's imagined threat. [See, we've been right all along.]

>Austin, Texas-based Whole Foods Market opened a new store today in the Lakewood section of Dallas, Texas. Bizjournals.com covered and writes about the store opening today here: Whole Foods opens Lakewood location.

>As part of its recent strategic emphasis on value, Whole Foods is focusing on merchandising and promoting products for cooking at home, which millions more U.S. consumers are doing in the current economic recession than they were just a year ago. One of the programs within this cooking at home promotional emphasis for Whole Foods is its new seasonal kitchen program. The Providence (Rhode Island) Journal writes about the program here: A return to home cooking.

New FTC Chairman Jon Leibowitz formal announcement today

We first reported in this February 24, 2009 piece [Retail Memo - Breaking: FTC Commissioner Jon Leibowitz Odds On Favorite to Be Named Chairman; Positive Development For Whole Foods' Settlement Talks] that FTC Commissioner Jon Leibowitz was a lock to become the new chairman of the federal regulatory agency responsible for competition, antitrust regulation and consumer protection.

We said President Obama would name Leibowitz FTC Chairman by last Friday, February 27. As we reported On Friday in this piece[ Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6][See, Leibowitz in as new chairman] the White House confirmed on Friday that Mr. Leibowitz was indeed the President's choice to head the FTC.

The White House made its formal, public announcement regarding Jon Leibowitz being named by the President to head the FTC today. Note: since Mr. Leibowitz is already an FTC Commissioner, he need not go through the Senate confirmation process as would be the case for a an outside presidential appointee the the position.

Here's the Washington Post's report today: FTC's Lone Democrat Named as New Chairman.

Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6

The week has come to an end without a settlement deal being reached by Whole Foods Market, Inc. and the U.S. Federal Trade Commission (FTC) over the FTC's legal challenge to Whole Foods' 2007 friendly $565 million acquisition of Wild Oats Market, Inc.

The two parties will take the weekend off from the settlement talks and resume them on Monday, March 2, 2009. (Remember, February only has 28 days.)

The FTC has set March 6 as the day when its current halt of legal proceedings regarding its attempt to overturn the merger ends. The federal regulatory agency can extend its halt if it so desires.

However, the FTC has set April 6, 2007 as the start date of its administrative trial at which an Administrative Law Judge chosen by the U.S. federal government agency responsible for antitrust issues and consumer protection will hear arguments from both sides regarding the 2007 acquisition. Plans are that after the end of the trial, the Administrative Law Judge will make an administrative ruling on the status of the now nearly 100% combined Whole Foods-Wild Oats.

It's been about 18 months since the deal was done. U.S. Federal Judge Paul Friedman ruled in Whole Foods Market, Inc.'s favor nearly a year ago, giving Whole Foods the green light to merge Wild Oats into its operations and rebrand the former Wild Oats' stores to Whole Foods -- a ruling that was later overturned by a federal appeals court -- which is why the two parties are where they are today.

All but about 6-10 of the former Wild Oats stores have been rebranded to the Whole Foods banner. After selling off some of the stores after the acquisition, most notably the then Wild Oats'-owned Henry's stores in Southern California (26 stores) and Sun Harvest stores (9) in Texas -- which were bought from Whole Foods Market, Inc. by Los Angeles, California-based Smart & Final LLC -- along with closing a few of the Wild Oats banner stores, Whole Foods is left with about 100-110 former Wild Oats stores, all bought the handful mentioned above now integrated into Whole Foods' culture and operations.

When the Whole Foods Market-FTC. settlement negotiations start-up again on Monday morning, March 2, there will only be five full business days left until March 6, the date the FTC plans to end its halt of legal proceedings regarding the merger.

The FTC initiated the halt after outside legal counsel for Whole Foods Market, Inc. came to the regulator with a settlement proposal from the company in January, 2009. The initial halt, which was to have ended earlier this month, was extended to march 6 by the FTC as a good faith gesture designed to give both parties some "breathing room" in the settlement talks.

We believe both parties are motivated to reach a settlement deal rather than go to trial on April 6. The question remains: Can they collectively come to an agreement-settlement that satisfies the needs and requirements of both parties this late in the game?

FTC. v. Whole Foods Market: News & Notes

Fear & Loathing in the Texas Congressional delegation: The 'silence of the pols'

Whole Foods Market, Inc., which had gross sales in 2008 of $8 billion, is headquartered in Austin, Texas, it's hometown since 1980 when the very first Whole Foods Market natural foods store was opened in the city.

The company is ranked as the 21rst-largest food and grocery retailing chain in the U.S. by the supermarket industry trade publication Supermarket News, which each year ranks the 75 top food and grocery retailers based on total annual sales, regardless of format, in the U.S.

Whole Foods' is a major corporate citizen and employer in Austin and throughout the state of Texas. The natural grocery chain currently operates 278 stores in the U.S., Canada (6 stores) and the United Kingdom (5 stores). Of those 267 Whole Foods stores that are in the U.S., 16 are located in the state of Texas, the natural grocer's home state

Three of the 16 Texas natural foods markets are located in Austin, including Whole Foods biggest store, it's flagship, Austin natural foods emporium that's over 80,000 square feet in size. [Click here for a full list of Whole Foods' Texas stores.]

Whole Foods Market currently has five new stores in various stages of development in Texas.

In other words, with $8 billion in annual sales, its corporate headquarters in Austin, and 16 current and five new stores in development in Texas, Whole Foods Market, Inc. is an important company for Texas in terms of job creation, tax generation and revenue, and corporate philanthropy, among other benefits of having it located in the state.

One would think so at least. But we just have to ask: Where are Texas' two United States Senators and its 32 members of the U.S. House of Representatives when it comes to speaking out for Whole Foods Market, Inc. on the FTC. v. Whole Foods Market, Inc. legal case? The answer: basically silent.

Are they "for it (the merger) or are they agin' it (the FTC's challenge)," as they like to say in Texas? One should expect some rather vocal public show of support for the local grocery chain in this battle, shouldn't they? We've been listening closely for a long time and haven't heard it.

We've been covering the issue closely since the summer of 2007, and even more closely since November of 2008, when things started heating up again, to the present, where the heat is even hotter. In this time we have not been able to find one of Texas' 32 Congress members, including those from Austin, Whole Foods' hometown, who has taken a strong, public stand on the issue and spoken out regularly on the FTC's legal attempt to overturn the deal.

[You can view a complete list of all 32 members of Congress from Texas here. The list includes links to their e-mail addresses. So if you want to ask them where they stand on FTC. v. Whole Foods and why they haven't spoken out on it, just click the little folder at the bottom of this post and you can e-mail the story to them.]

The two Senators from Texas, John Cornyn and Kay Bailey Hutchinson, both Republicans, haven't said anything we can find, and certainly not in any significant public way, about the FTC's continued attempt to overturn the acquisition of Wild Oats Market, Inc. by one of their state's leading corporate citizens, Whole Foods.

Since Whole Foods Market, Inc.'s growth means more jobs in Texas, more taxes paid by the corporation, and other related things favorable to Texas, one would think the state's Senators, especially since both are Republicans who are self-stated strong anti-government regulation types, would speak out in favor of Whole Foods Market and urge the FTC to reach a settlement with their home town grocer wouldn't you? [Click here for information on the two Senators from Texas.]

This should have particularly been the case since the FTC launched the challenge in 2007 when a fellow Republican, George W. Bush, was President. President Bush just left office at the end of January. But then it's the two Republicans on the FTC who have been the most aggressive in wanting to break-up the merger. So, go figure.

Austin, Texas, where Whole Foods Market was founded and is headquartered, is in Texas' 25th Congressional district, which is represented in the House by Democratic Congressman Lloyd Doggett.

Congressman Doggett has been near as silent as one can be in public office about the FTC. v. Whole Foods Market, Inc. case. We find that rather strange. For example, take a look at his House Web site here. There's lost of news about issues dear to his heart but not one thing we could find about the FTC-Whole Foods issue, which is currently at his high point and affects his home city of Austin. Doggett was born in Austin and still lives there.

Neither Texas Senator has said much of anything about the FTC's 18-month challenge to Whole Foods friendly 2007 acquisition of Wild Oats Market, Inc. Since Whole Foods' spend $11 million alone in its first quarter of this fiscal year, and many millions more since the FTC challenge in 2007 started, millions the natural grocery chain could have used to hire employees in Texas, for example, you would think the company's biggest defenders would be the two Republican Senators from Texas, along with Congressman Doggett and the other 31 members of the House of Representatives from Texas.

We now some of the members of the Texas delegation have been working the issue from a lobbying perspective on Capital Hill among fellow members. But we also know many of the members from Texas have done little or nothing regarding the case. And we can't find one who has taken a strong position against the FTC's legal challenge and spoken out against it on a regular and sustained basis, such as appearing on the cable news channels, talk radio and the other normal venues members of congress always use when they want to make a point and influence regulatory agencies, the press, fellow politicians and the public.

Not even former Republican candidate for President and Congressman from Texas, Ron Paul, who like Whole Foods Market, Inc. CEO John Mackey is a Libertarian, has spoken out in any way in public about the FTC challenge to his home state grocer, which is really odd since Paul is arguably the leading elected official in Washington against excessive government regulation, not to mention the fact he represents people who work at Whole Foods stores in Texas.

The "Silence of the Texas Delegation" is indeed odd to us. It's not like they are shy people after all. And its not like Texas couldn't use a few more new jobs that a combined Whole-Foods, or even a healthier Whole Foods Market, Inc., will bring it.

You can bet if Whole Foods' was based... let's see... say in California, where it currently operates 53 stores -- three times as many as it has in Texas -- and has 20 new stores in the development pipeline, that Democratic Senator Barbara Boxer, a Whole Foods Market shopper in Washington D.C. and at home in Marin County, and Senator Diane Feinstein (also a Democrat -- who's husband, financier Richard Blum, has been known to comb the aisles of the Whole Foods Market store on California Street in the city not just as a shopper but also to get ideas for investments by looking at products on the shelves -- would be speaking out publicly and strongly in favor of Whole Foods' and against the FTC, even if they were lukewarm on the whole thing -- without a doubt. It's called good constituent service, not to mention job savings and creation.

We also are willing to bet that if the Colorado Congressional delegation, especially those members representing the city of Boulder and the surrounding metropolitan region, which lost Wild Oats' corporate headquarters after Whole Foods acquired the company, thought it possible that Whole Foods Market, Inc. might be interested in moving its corporate headquarters to Boulder, there would be no 'silence of the pols" like is the case with the Texas delegation.

We think that's food for thought for Whole Foods Market, and the members of the Senate from Texas, and the Texas Congressional delegation.

By the way, what's really with the Texas Congressional pols' and their silence vis-a-vis the FTC's ongoing attempt to break up the Whole Foods Market acquisition of Wild Oats?

Maybe they agree with the FTC?

Are the Republicans afraid to look soft if they support crunchy Whole Foods?

What about Democrat Doggett, the Congressman from Austin? He should have been on CNN's Larry King and MSNBC (and Fox News if they let him on) talking up the issue last year when the FTC got tough again. He wasn't there. He didn't do it. Too late now.

It's hard to know the answers though -- because of the "silence of the Texas pols" on the FTC. v. Whole Foods Market legal case and issue.

Leibowitz is in as new FTC Chairman

On Tuesday, February 24 we reported in this piece [Retail Memo - Breaking: FTC Commissioner Jon Leibowitz Odds On Favorite to Be Named Chairman; Positive Development For Whole Foods' Settlement Talks] that current FTC Commissioner Jon Leibowitz, the only Democrat out of the current four sitting FTC commissioners, was a lock to be named by President Obama to head the regulatory agency, replacing the current Republican Chairman. We also said President Obama would likely announce his decision by the end of this week.

Yesterday (Thursday, February 27) in our Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 9 Days to March 6 column we wrote this item:

"On Tuesday in this piece [Retail Memo - Breaking: FTC Commissioner Jon Leibowitz Odds On Favorite to Be Named Chairman; Positive Development For Whole Foods' Settlement Talks]we wrote that current FTC Commissioner Jon Leibowitz, a Democrat, appears to be a lock as the new chairman of the regulatory agency. We said President Obama was likely to make the announcement before the end of this week. We are told by our sources the President will do so tomorrow. But President Obama is a rather busy President these days, so it might not happen on Friday. However, we continue to believe Leibowitz is the man."

Today, Friday, February 28, a spokesperson from the White House press office told correspondents that cover the White House that Jon Leibowitz indeed is President Obama's choice as the new FTC Chairman. The spokesperson said a formal announcement would be coming next week.

We made it by the skin of our teeth in terms of saying the choice would be announced by the White House by the end of business today. We will have some analysis on Mr. Leibowitz being named the new FTC Chairman as it relates to FTC. v. Whole Foods Market, Inc. next week. Stay tuned.