Retail Memo: Whole Foods Market is Selling Brand 'Wild Oats'- We Offer Three Retailers We Suggest Could Benefit From Buying the Brand

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

As we reported 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] on March 6, 2009, the settlement agreement reached between Whole Foods Market, Inc. and the U.S. Federal Trade Commission (FTC) over the FTC's antitrust legal challenge to Whole Foods' 2007 acquisition of Wild Oats Markets, Inc. included three elements or terms. Those terms are:

>The selling of 13 (12 former Wild Oats' units, one existing Whole Food's unit) stores currently being operated by Whole Foods Market, Inc.;

>The selling of 19 closed stores; 10 closed by Wild Oats before the acquisition and nine closed by Whole Foods Market, Inc. post-acquisition and;

>The selling by Whole Foods Market, Inc. of the "Wild Oats" brand and all related intellectual property.

As part of the settlement agreement, a third-party receiver is handling the sale of the 32 stores and the "Wild Oats" brand and intellectual property.

It is the third element of the settlement agreement -- the selling of the brand -- that we focus on in this piece today.

It's our analysis that having to sell the brand is something that hurts Whole Foods Market not at all.

In fact, since acquiring Wild Oats Markets, Inc. in 2007, Whole Foods' has done pretty much all buried the brand by design and strategy. Therefore, we see no downside -- nor do we believe Whole Foods Market, Inc. does -- in the natural grocery chain's selling of the "Wild Oats" brand.
If Whole Foods Market gets a decent price for the brand and related intellectual property, it's our analysis and opinion that the retailer probably will view that aspect of the settlement deal as pure blue sky. [We don't think the selling of the stores hurts Whole Foods in anyway either, as we mentioned in our March 6 story. It's all blue sky for Whole Foods.]

Natural~Specialty Foods Memo (NSFM) does see some value in the "Wild Oats" brand -- not particularly to Whole Foods Market, especially at this point in time since the natural grocery chain already made a strategic decision not to use the brand long before the FTC settlement requirement to sell it -- but to a handful of other retailers.

In this vein, we offer an analysis below of three very different retail chains -- natural foods grocery chain Sunflower Farmers Market, mega-retailer Wal-Mart, and online retailer Amazon.com -- that could benefit from buying and using the Wild Oats brand.

Sunflower Farmers Market

The fast-growing Boulder, Colorado-based natural foods chain, which was founded by and is run by Mike Gilliland (CEO), who also founded Wild Oats in 1984 in Boulder, might want to take a look at buying the "Wild Oats" brand from Whole Foods Market, Inc.

This is not just because of the nostalgic fact that Gilliland founded and named the grocery chain Wild Oats, although that aspect has a heart warming aspect to it, but rather because the brand name could offer some merchandising and marketing advantages to Sunflower Farmers Market.

The Texas connection: First, probably because an existing health food store in Texas has the name "Sunflower," Sunflower Farmers Market has chosen to name its stores in the Longhorn state "Newflower." Might it not be interesting if Sunflower Farmers Market buys the "Wild Oats" brand from Whole Foods and then changes the name of those Texas stores to "Wild Oats," using the old Wild Oats logo (which is attractive) and related intellectual and brand properties?

We think doing so could offer benefits to Sunflower in its Texas stores. The "Wild Oats" brand name still has brand equity, in our analysis, particularly among primary natural foods shoppers, and particularly in the Western U.S.

It would also be an ironic development were this to happen since Whole Foods Market is based in Texas. Sunflower just opened its first "Netflower" store in Austin, where Whole Foods' corporate headquarters is located, a couple weeks ago.

Additionally, brand "Wild Oats" might also offer Sunflower Farmers Market some additional options and benefits.

For example, the natural grocer could use "Wild Oats" as a private label brand. Wild Oats Markets, Inc. had a full line of natural and organic products under the brand, even selling the brand and line at Kroger stores throughout the U.S. for a few years, in addition to in the Wild Oats Market stores.

Whole Foods Market, Inc. has now sold off most of the "Wild Oats" brand items, replacing them in the converted former Wild Oats Market banner stores with Whole Foods Market store brands. But the recipes, graphic design for the labels and all of the other intellectual and material property still exists for the brand's product line. All Sunflower, or any other grocer, need do if they acquire the brand is to decide what products they want to put under it and hire vendors to produce the products.

Perhaps brand "Wild Oats" would make a good premium natural products brand for Sunflower Farmers Market, featuring either just organic or both natural and organic items, for example.

Further, owning the brand would allow Sunflower Farmers Market and Gilliland to use it on any stores it desired at any time. For example, Perhaps as the chain grows it creates a second retail format, branding it "Wild Oats." We could see a higher-end format from Sunflower (after the recession), for example, that used the Wild Oats retail brand on it. This would fit with the positioning of the brand on products being of a more premium natural and/or organic nature, under that scenario.

Lastly, imagine the marketing-oriented public relations attention buying the "Wild Oats" brand would have for Sunflower Farmers Market and Mike Gilliland.

We can see the headlines now: (1) "Wild Oats' brand returns to founder." (2) Mike Gilliland sows his 'Wild Oats': plans Texas stores under the Wild Oats Market banner." (3) It's 'Back to the Future' for Sunflower Farmers Market founder and CEO Mike Gilliland, as he prepares to launch a new line of private label natural and organic products in the Sunflower stores under the 'Wild Oats' label."

This could be publicity no amount of money can buy, particularly timed with the launch of the rebranded "Newflower" stores under the Wild Oats' retail banner in Texas, or the launch of a new proprietary natural product line under the "Wild Oats" brand for Sunflower. Just some food for thought.

And, since the settlement with the FTC requires a third-party receiver to sell brand "Wild Oats," Whole Foods Market, Inc. can't veto a sale of the brand and its assets to Gilliland and Sunflower Farmers Market (or to any other competitor), should the natural grocer decide to acquire it.

Wal-Mart Stores, Inc.

We go from small but fast-sprouting Sunflower Farmers Market to global giant Wal-Mart in this journey.

We think buying the "Wild Oats" brand from Whole Foods has some merit for Wal-Mart. For example, Wal-Mart brands its fast-growing line of natural and organic products under the "Sam's Choice" brand. While it's nice that this brand honors Wal-Mart founder Sam Walton, it really has very little resonance in consumers' minds when it comes to natural or organic food. In fact, since Sam Walton was a very frugal man, we doubt he would have spent the extra money that natural and organic food and grocery items cost anyway.

Wal-Mart could use brand "Wild Oats" for private label brand natural-organic products in a few ways.

First, it could brand all of its natural and organic products under the brand, including changing existing "Sam's" items to brand "Wild Oats."

Second, it could create a two-tier brand system. "Sam's" would be used for lower price-point natural and organic items, "Wild Oats" for higher-end, premium natural-organic items.

Lastly, Wal-Mart could use the "Wild Oats" brand name strictly for organic food and grocery items, then use "Sam's" or something else for "natural" only.

We think Wal-Mart needs a better brand for natural-organic using one of the above three product scenarios

Wild Oats' is a good brand name, still has equity, and is for sale. Therefore, although we know this is way down on the list of Wal-Mart Stores, Inc.'s priorities list, we think acquiring the brand from Whole Foods Market would offers a nice opportunity in the natural-organic products categories for Wal-Mart, which continues to move deeper into the categories, and will move much faster once again in the natural-organic private label and retailing spaces once the recession ends.

Wal-Mart also now operates four (soon to be five when it opens a new store in Peoria, Arizona later this year) of its small-format Marketside grocery and fresh foods stores. (Wal-Mart also has two Marketside stores under construction in San Diego County, California, with three more planned in California.) The 15,000 -to- 20,000 square foot markets feature a limited assortment of basic food and grocery items, including natural, organic and specialty items, fresh meats and produce, perishables and in-store prepared foods.

The Marketside stores are more upscale than any of Wal-Mart's other formats. A selection of natural and organic items in the stores under the "Wild Oats" brand could be a nice addition to the natural and organic item selection-segment in those stores for Wal-Mart.

Amazon.com

In 2007 the online retailer Amazon.com started selling shelf-stable food, grocery, household item, health and body care and related packaged goods. Today the online mega-store's inventory in these respective categories is vast and extensive, including offering lots of natural, organic and specialty food and grocery items for sale.

Shoppers order the food and groceries online just as they do everything else that Amazon merchandises. The orders are then delivered to shoppers' homes via Federal Express, UPS or other basic delivery service.

In a little over two years, Amazon has gone from merely experimenting with selling food and groceries to actually selling a considerable volume of product, including a decent amount of natural and organic food and grocery products.

We think Amazon should take the logical next step in its progression as an online grocer and start offering its own brand products. Since the web retailer doesn't have the volume needed to really yet have a store brand everyday or discount grocery brand, we suggest a good place to start would be with a natural and organic products store brand.

Therefore, why not brand "Wild Oats"? The brand still has consumer awareness and equity. Everything is there to rapidly start producing whatever products are desired; all that's needed are vendors. And, the brand is for sale.

Amazon could create its own natural and organic food and grocery proprietary brand under the "Wild Oats" brand. It could start small, say with about 45-75 items in a half dozen -to- a dozen categories to start. We would suggest all the products be consumables and health and body care to start. Then it could go from there with the brand.

Amazon also could extend the brand "Wild Oats" across the numerous categories it sells products from. For example, how about "Wild Oats'" proprietary brand organic cotton clothing? What about body care, vitamins, supplements? How about a line of "green" cleaning products under the brand."

In other words, brand "Wild Oats" could allow Amazon to have a proprietary brand that it could use to create it's own "brand" in the numerous categories -- from food and drink to clothing and health and body care -- that avail themselves of a natural-organic products focus.

Amazon is without a doubt big enough to do this. We think it would be a very positive development for the online mega-retailer. It also, in our analysis, would help build better product brand equity for the online retailer.

Amazon.com is a major player in natural products retailing across numerous categories. The Wild Oats brand could allow it to become a much bigger category player in many mainstream and niche natural and organic products segments, from consumables to clothing, and much more.

Conclusion: Brand 'Wild Oats' - will any retailers bite?

There are other retailers besides the three we offer that could benefit from acquiring the brand from Whole Foods Market, Inc. Most interesting to us will be if a competitor -- like Sunflower Farmers Market, Sprouts Farmers Market or Natural Grocers by Vitamin Cottage -- buys brand "Wild Oats" with the design of using it as the name for a chain of stores.

Or, if another format retailer, say Target or Wal-Mart, were to buy it with the idea of someday using "Wild Oats" for a chain of natural foods markets. We doubt this scenario -- but that doesn't make it any less interesting.

It's our analysis that the FTC hopes something like the first scenario above happens -- that some competitor of Whole Foods Market buys the brand and uses it to compete against Whole Foods.' That's the key reason the FTC required there be a third party receiver appointed to handle the sale of the brand and the store sales: It wanted to make sure that Whole Foods Market, Inc. couldn't veto the sale of brand "Wild Oats" or the sale of any of the stores on the block to a competitor.

It will be interesting to see if any retailers bite and make an offer to buy the brand. Readers: Which retailers do you think could benefit from buying brand "Wild Oats" from Whole Foods Market, Inc? Offer your idea(s) and opinion(s) by using the "comments" link below. Just click and type.

[Related posts: March 8, 2009: Retail Memo: The FTC-Whole Foods Market Settlement Agreement Looks Much Like Our January 'Blueprint-Template For A Settlement Deal' Proposal ... March 6, 2008: Retail Memo: The 'Whole Bibliography' - FTC v. Whole Foods Market Antitrust Case & Issue ... March 6, 2008: Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge ... March 5, 2008: Daily Memo: Whole Foods Market - FTC - Settlement Deal Watch - Countdown to March 6]

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

Guest Memo: Satire From The Onion - 'FDA Approves Salmonella'

FDA director Stephen Sundlof okays the bacteria for eating, drinking, and applying directly to the skin. [the Onion. March 10, 2009.]

On The Lighter Side

From the Natural~Specialty Foods Memo (NSFM) Editor's Desk: As we're all too aware, the food-borne pathogen salmonella is a tough one to shake. In 2007 it showed up in salad greens in the United States. In 2008 it appeared in fresh peppers and Roma tomatoes. And now -- its peanut butter. Salmonella appears to be the enterobacteria that keeps on giving when it comes to appearing in various parts -- and products -- of the U.S. food supply chain.

And try as it might, the U.S. Food and Drug Administration (FDA) just hasn't been able to figure out how to stop these frequent and very serious food safety issues centered around Salmonella contamination in a host of very different foods and food products.

Perhaps the satirical publication "the Onion" has the right approach in a piece it published today. In that piece, "FDA Approves Salmonella," "the Onion" offers an "if you can't beat it embrace it" approach to the Salmonella contamination issue.

We reprint the humor piece from "the Onion" below (in italics). Remember -- it's satire:

WASHINGTON—Calling it "perfectly safe for the most part," and "not nearly as destructive or fatal as previously thought," the Food and Drug Administration approved the enterobacteria salmonella for human consumption this week.

The federal agency, which has struggled in recent years to contain the food-borne pathogen, and repeatedly failed to prevent tainted products from reaching store shelves, announced Monday that salmonella was now completely okay for all Americans to enjoy.

"Rigorous testing has shown that salmonella is...fine," FDA director of food safety Stephen Sundlof said. "In fact, our research indicates that there's no need to pull any more foodstuffs from the market. Not raw chicken. Not contaminated spinach. Not thousands of jars of harmful peanut butter. Not anything."

"It's approved," Sundlof continued."Healthy, delicious salmonella is finally approved."

Following the announcement, the FDA released a 20-page report, which included evidence that salmonella is barely more dangerous than other live-culture products such as yogurt, and results from a clinical trial which found that participants who ingested salmonella were totally fine for up to three minutes.

The report also concluded that salmonella has been around American kitchens for centuries now, and must therefore be at least harmless, if not actually good for us.

"Of course, as with everything, we encourage moderation," lead FDA researcher Phillip Millar said. "Don't just eat a whole pint of salmonella in one sitting. It's like ice cream or, for example, E. coli in that respect."

Added Millar, "A little bit goes a long way."

According to FDA officials, the intracellular bacterium will be commercially available in a variety of forms. Plans are already in the works to offer salmonella as a flavorful topping, food spread, powdered drink mix, dessert gelatin, and as a "no frills" yellow liquid guaranteed to enhance one's overall eating experience.

With hundreds of possible applications, the newly approved gram-negative microbe will also open the door for many innovative and exciting products.

"This is thrilling news," Hellmann's CEO Robert Reichert said. "We've been waiting for the federal go-ahead to produce salmonella for decades now. In fact, we have an entire line of lukewarm, sun-soaked, and partially turned mayonnaises that we just know Americans will love."

A variety of products containing the newly approved food-borne microbe will hit non-refrigerated shelves this month. [the Onion. March 10, 2009.]

One of several new foods to feature the motile microorganism is Salmonell-Os—an O-shaped breakfast cereal packed with hearty typhoid clusters—which is expected to hit grocery stores by April.

Other products currently in development include Salmonella Helper, Kraft's Extremely Painful Mac, 'Nella Wafers, and peanut butter.

"Now that salmonella's been approved, we're working overtime to get our products to market," said David Wellbrook, head of sales for Oscar Mayer, the nation's leading producer of bologna-based goods. "I've never seen so many orders come through in a single year, much less a single day. It's incredible."

News of salmonella's approval also comes as a relief to many homemakers, who, until now, had been cautioned against letting the bacteria spread.

"It used to be such a pain to have to sanitize my kitchen," Chicago resident Margaret Thewles said. "Now all I need is one cutting board. I'll cut raw poultry on it, prepare my salad veggies on it, and then use it to serve dessert when I'm done."

Salmonella is said to contain the seven essential forms of bacteria growing infants need. [the Onion. March 10, 2009.]

Michael Weinback, a California native and father of two young children, agreed with Thewles."

This is…arrghhh…great," Weinback said from the bottom of his living room stairs. "Oh, Jesus…here it comes agai—uuuuhhhhh, Christ. Get hel…just get…aarrghh.

[Natural~Specialty Foods Memo (NSFM) Editor's Note: NSFM thanks"the Onion" for permission to reprint the satirical story above. Click here to read the original satirical piece at "the Onion" Web site.

Retail Memo: The FTC-Whole Foods Market Settlement Agreement Looks Much Like Our January 'Blueprint-Template For A Settlement Deal' Proposal

The FTC - Whole Foods Market, Inc. Settlement Agreement

The four members (their normally are five but the FTC is currently one short) of the U.S. Federal Trade Commission (FTC) voted unanimously on the settlement deal with Whole Foods Market, Inc., announced on Friday, March 6, ending the nearly 20-month legal battle waged by the FTC to overturn the 2007 friendly acquisition by Whole Foods Market of Wild Oats Markets, Inc. [Read the details of the settlement agreement in our March 6 piece here: Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge.]

Additionally, the 4 -to- 0 unanimous vote in favor of a settlement by the FTC's Commissioners came just eight days after President Obama named the only Democrat on the FTC, Jon Leibowitz, as its new Chairman, and just a few days after Chairman Leibowitz officially assumed the duties of FTC Commission Chairman.

[Read: Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - Countdown to March 6, And: Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 9 Days to March 6. And: Retail Memo - Breaking: FTC Commissioner Jon Leibowitz Odds On Favorite to Be Named Chairman; Positive Development For Whole Foods' Settlement Talks.]

Below is a link to the press release issued by the FTC on Friday, March 6, announcing the settlement deal ending its antitrust legal challenge to Whole Foods Market's 2007 acquisition of Wild Oats:

[Link: FTC Consent Order Settles Charges that Whole Foods’ Acquisition of Rival Wild Oats was Anticompetitive.]

Below is the key quote from FTC Commissioner Jon Leibowitz in the March 6 press release regarding why the federal regulatory agency responsible for antitrust enforcement and consumer protection decided to reach and agree to a settlement with Whole Foods Market, Inc., despite for 20 months saying it's goal was to overturn the acquisition in order to preserve competition in what it called the "premium natural and organic retailing segment (PNOS) in a number of U.S. markets:

"As a result of this settlement, American consumers will see more choices and lower prices for organic foods,” said FTC Chairman Jon Leibowitz. “It allows the FTC to shift resources to other important matters and Whole Foods to move on with its business."

Although we've previously suggested the two parties should reach a settlement agreement in numerous pieces beginning some time ago, Natural~Specialty Foods Memo (NSFM) formally called for the FTC and Whole Foods Market, Inc. to reach a settlement on the legal case in this January 29, 2009 piece, where we focused the argument on the need for a settlement to be reached: Retail Memo - Breaking: Whole Foods Makes Settlement Offer to FTC; FTC Halts Action For 5 Days; Natural~Specialty Foods Memo Calls For A Settlement.

In that call for a settlement, we said achieving a settlement is important in part so that the FTC can move on to more important matters, including finding real antitrust cases to challenge, and so that Whole Foods Market can get back to what it does: merchandising and selling natural and organic food and grocery products.

In other words, FTC Chairman Leibowitz basically says in the March 6 press release what we said in our January call for a settlement, as well as in a number of stories prior to that.

In our January 29 piece, [Retail Memo - Breaking: Whole Foods Makes Settlement Offer to FTC; FTC Halts Action For 5 Days; Natural~Specialty Foods Memo Calls For A Settlement], we also offered a settlement blueprint or template for the FTC and Whole Foods. The basis of the settlement blueprint comes from the reporting, writing about and analysis we've been offering on the deal and antitrust challenge since the summer of 2007.

Below is a part of what we offered in the January piece:

A settlement blueprint or template

"In other words, the universe of stores we are talking about regarding a post-merger, combined Whole Foods-Wild Oats isn't much more than 100 nationally throughout the U.S. in these 29 markets where the FTC deems Whole Foods Market, Inc. a PNOS segment monopoly.

Our argument since the summer of 2007 has been that a post-merger, combined Whole Foods-Wild Oats isn't a monopoly. [You can read a recent story in which we made our argument as to why that's the case at the link here: 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.]

However, looking at FTC v. Whole Foods Market, Inc. today from a completely practical standpoint, we see no reason why the FTC and the natural grocer should not be able to achieve a settlement. After all, we are talking about a universe of just slightly more than 100 stores that the FTC is saying a "PNOS" category monopolist (Whole Foods) makes. We're also talking about just 29 specific U.S. markets. These two key facts need to be the starting point for negotiation, we suggest.

The FTC and Whole Foods need to look at each of these 29 markets and the number of stores the combined Whole Foods-Wild Oats has in each of the markets. Both parties then need to do an independent competitive analysis on each of these markets, including in the analysis not just natural foods class of trade retailers but also food retailers that are hybrid natural-organic-specialty supermarkets. These include retailers like Gelson's and Bristol Farms in Southern California, Raley's and Andronico's Markets in Northern California, The Fresh Market (chain), which has stores in the south, Midwest, Mid Atlantic and eastern regions, Wegmans in the east, Haggen Foods in the Pacific Northwest, and the numerous other natural-organic-specialty "hybrid" chains that fit this category in the 29 markets designated as monopolist by the FTC.

Once this real competitive analysis is done in the 29 U.S. markets, the FTC and Whole Foods then need to agree on Whole Foods' closing an agreed upon number of those 100-plus former Wild Oats stores in each of the respective markets. There still might remain 29 of those markets after the independent competitive analysis work is done, which is something that can be completed in a matter of a few days. But there also could be fewer than 29 remaining after the analysis.

The burden in the FTC's administrative process is on Whole Foods in reaching a settlement, that's why the natural foods grocery chain reached out to the FTC and submitted a settlement offer. In return the FTC suspended action on the case for five days. We think thus far that's a positive spirit of cooperation.

As all lawyers and negotiators know, first time settlement offers are seldom accepted. Instead they tend to be the opening entree to get settlement talks started. Whole Foods has served that opening entree with its offer. The FTC has responded in kind with the temporary halt of legal activity. Both moves are good negotiation openers. After all, another thing all good negotiators know is that the best negotiations come when both sides give a little something right at the start." [Read the entire story here.]

What we suggested is essentially the framework the FTC used in arriving at the settlement deal.

The FTC required (and the natural grocer agreed) Whole Foods Market, Inc. to put up for sale 32 stores -- 13 stores (12 former Wild Oats units and one existing Whole Foods unit) currently in operation and 19 stores that already have been closed, some by Wild Oats before the Whole Foods Market acquisition, the others closed by Whole Foods post-acquisition. [Read the details, including a list of the stores to be sold, here.]

Additionally, the FTC required Whole Foods to put the Wild Oats brand and associated intellectual property up for sale. This is really nothing to Whole Foods since if it thought the Wild Oats brand had value to the company it would be using it in some way. Instead, Whole Foods has intentionally shelved the Wild Oats brand. Now perhaps it can even make a few bucks from selling it.

[Of course, in the dynamic and interesting world of food retailing anything can happen. Perhaps Mike Gilliland, the founder of Wild Oats and now founder and CEO of fast-growing Boulder, Colorado-based Sunflower Farmers Market, will buy the brand from Whole Foods and bring back the Wild Oats name in the form of a chain of natural foods stores bearing the banner. For example, Sunflower is opening stores in Whole Foods' hometown market of Texas. However, because of what likely is a trademark issue with a natural foods store in Texas that uses the "Sunflower" name, the natural grocer has renamed its thus far handful of Texas' stores "Newflower." Wouldn't it just be ironic if Gilliland bought the Wild Oats brand from Whole Foods Market, Inc. and instead changed the name of the Texas stores to "Wild Oats"? It's intellectual property and retail brand marketing food for thought. And you read it here first.]

So, in a nutshell, the FTC seems to have used a very similar process to the one offered in our blueprint-template to arrive at a settlement deal; the key element of such a settlement agreement being, as we suggested, having Whole Foods agree to sell some selected stores in return for the antitrust regulator dropping its legal action, so that both parties could move on to doing what they should respectively be doing, antitrust enforcement and consumer protection for the FTC, and selling natural-organic groceries for Whole Foods Market.

We think the settlement is a good one for Whole Foods.

Reader Resource: Below are links to all of the FTC-filed information on the settlement deal with Whole Foods Market, Inc.:

>Agreement Containing Consent Orders
>Decision and Order [Public Record Version]
>Order To Maintain Assets
>Analysis of Agreement Containing Consent Orders To Aid Public Comment
>Commission Letter Approving the Divestiture Trustee Agreement
>Divestiture Trustee Agreement [Public Record Version] [Appendices B, D, and E Redacted]
>Amended Part 3 Administrative Complaint [Issued on September 8, 2008]
>News Release
>Order Withdrawing Matter From Adjudication

Retail Memo: The 'Whole Bibliography' - FTC v. Whole Foods Market Antitrust Case & Issue

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

In this story [Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge] published earlier today we reported on and offered some analysis about the settlement agreement reached today by Whole Foods Market, Inc. and the U.S. Federal Trade Commission (FTC) in the FTC's nearly two-year antitrust challenge to Whole Foods' friendly 2007 acquisition of Wild Oats Markets, Inc.

Natural~Specialty Foods Memo (NSFM) has been reporting on, writing about and offering analysis on FTC. v. Whole Foods Market, Inc., as well as suggesting to both parties on how to resolve the case and issue, since August, 2007.

In our analysis pieces, we first suggested over a year ago, and right up until recently, that one way for the FTC and Whole Foods to resolve the antitrust case would be for the two parties to agree on Whole Foods Market, Inc.'s divestiture of a set number of former Wild Oats stores acquired in the deal, thereby satisfying the FTC's claim that a combined Whole Foods-Wild Oats is a monopoly in what the regulatory agency called the "premium natural and organic retailing segment (PNOS)."

That's just what the FTC and Whole Foods Market, Inc. agreed to in its settlement deal announced today -- that Whole Foods will put up for sale 13 stores (12 former Wild Oats units and one existing Whole Foods store), along with 19 other former Wild Oats stores already closed, some closed by Wild Oats before the 2007 merger, others closed by Whole Foods Market post the 2007 acquisition. [See our story linked above for the details.]

Since the 19 stores are already closed, and since Whole Foods Market, Inc. would love to sell them anyway, what the settlement amounts to is the mere closing of 13 existing, operating stores by Whole Foods. Most of those stores are in the Western U.S.

Additionally, if the stores don't sell in a year, Whole Foods Market gets to keep them, per the settlement agreement with the FTC.

In our analysis, that's a good deal for Whole Foods Market.

Of course, since it's been our analysis since August, 2007 that the entire FTC antitrust challenge to the friendly acquisition by Whole Foods of Wild Oats was pure folly, based on a false premise, which the FTC then attempted to make real in court, the settlement also is a good deal for the FTC because it allows it to save face and provides it with at least a verbal, if not real, argument and justification for its nearly two-year expenditure of taxpayer money and agency resources and legal talent in battling the acquisition of Wild Oats by Whole Foods Market, Inc.

We should add that we've had no dog in the fight. We own no Whole Foods Market, Inc. stock. Do zero business with Whole Foods in terms of any sort of vendor relationship, and only shop at the stores from a consumer perspective as part of a multi-format, multi-store food and grocery shopping strategy.

We also happen to be antitrust hawks when we see real concentrations of monopolistic power in any business sector, including food and grocery retailing. For example, if Kroger Co. acquired Safeway Stores, Inc. or Supervalu, Inc. we would have an antitrust problem. The same if Wal-Mart were to acquire Costco... or even Target. Although in the current retailing climate we would look on such deals much more openly that we would have just a year ago.

But we do know a food retailing (natural-organic, premium or otherwise) monopoly when we see it. And the combined Whole Foods-Wild Oats wasn't one, as we've argued since August, 2007.

Below is a bibliography of all of the recent, relevant stories we've written and posts we've made regarding FTC v. Whole Foods Market, Inc. Additionally, at the bottom of the recent bibliogrpahy, we include links from the Natural~Specialty Foods Memo (NSFM) archives, going back to 2007, to stories and posts about the legal battle between Whole Foods and the FTC over the 2007 acquisition of Wild Oats.

Recent Bibliography: FTC v. Whole Foods Market, Inc.

Beginning on February 25, 2009, to today, March 6, the end of the FTC's halt of legal proceedings in its antitrust case against Whole Foods, and the day a settlement agreement was announced, we provided a daily countdown, updating what was happening (or not happening) each day in the negotiations, along with providing related news, information and analysis.

Daily Memo: Countdown to March 6, 2009:

>Read our Thursday, March 6, 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]

>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]

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.

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

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.]