Natural~Specialty Foods Memo: Search results for Whole Foods

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Friday, March 6, 2009

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

Thursday, 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

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

In this Tuesday, February 2 story [Retail Memo - Breaking Developments: FTC, Whole Foods Market, Inc. Progressing in Settlement Talks; Could the Negotiated End-Game Be Near?], in which we reported that a source close to the settlement discussions between Whole Foods Market, Inc. and the U.S. Federal Trade Commission (FTC) told Natural~Specialty Foods Memo (NSFM) progress was being made towards reaching a potential agreement over the FTC's legal challenge of the 2007 Whole Foods-Wild Oats merger, we said the FTC would likely extend its current five business day halt order in its antitrust challenge of the deal if it felt negotiations were promising.

The FTC did just that late yesterday afternoon.

David P. Wales, the acting director of the FTC's Bureau of Competition, issued a one paragraph statement late yesterday afternoon in which he announced the regulatory agency was extending by an additional 30-days it's order to halt the antitrust proceedings so that Whole Foods and the FTC could continue the ongoing settlement negotiations. The FTC's challenge is now on hold until March 6, 2009. The five business day halt order was set to expire this morning.

This is all the FTC's Wales said in his statement extending the halt order until March 6: "We look forward to continuing our discussions with Whole Foods to determine whether we can reach a mutually agreeable settlement that would be in the best interest of consumers." [Link to the full FTC statement.]

The 30-day extension allows both parties more time to negotiate, and possibly come to a settlement deal over the $565 million friendly acquisition by Whole Foods of Wild Oats Market, Inc., before the scheduled FTC administrative trial designed to decide the fate of the combined Whole Foods-Wild Oats starts on April 6, just 30-days after the FTC's 30-day extension of proceedings ends.

Based on what our sources have been telling us, as well as yesterdays decision by the FTC to extend the order to halt proceedings, its our analysis that both parties are hoping to reach a settlement agreement before that April 6 FTC trial start date.

In fact, in this January 29, 2009 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] NSFM called for the FTC and Whole Foods Market, Inc. to reach a settlement, suggesting the time has come for a meeting of the minds. We also set forth a simple blueprint both parties could use to aid them in negotiations.

In our Tuesday piece [Retail Memo - Breaking Developments: FTC, Whole Foods Market, Inc. Progressing in Settlement Talks; Could the Negotiated End-Game Be Near?] we said this:

"Here is what we've learned thus far: Our source tells us the FTC has reviewed Whole Foods' initial settlement offer but wasn't completely satisfied by what it contained. We are told one element of the offer involves a willingness on Whole Foods' part to sell a number of the former Wild Oats stores, now rebranded under the Whole Foods Market banner, in some of the 29 U.S. markets where the FTC says a combined Whole Foods-Wild Oats is a monopoly in what the regulator calls the "premium natural and organic retailing segment (PNOS).

After reviewing the Whole Foods' settlement offer, we're told the FTC sent the natural grocery chain's outside legal counsel back to company CEO John Mackey and his top executives, suggesting the grocer needs to sharpen its pencil a bit more regarding its settlement offer. We were unable thus far to find out if the FTC has made any specific suggestions to Whole Foods' lawyers regarding in what specific ways Whole Foods Market, Inc. needs to sharpen the settlement offer."

Based on our source information we believe it was this turn of events, elaborated on more fully in the Tuesday story, which led to the FTC's decision late yesterday to extend its order to halt for an additional 30-days.

At the core of the FTC's legal challenge of the 2007 merger is that it argues a combined Whole Foods-Wild Oats is a monopoly in what the regulatory agency calls the "premium natural and organic retailing segment (PNOS)." This segment as defined by the FTC includes "premium natural and organic foods retailers" like Whole Foods Market, Inc., Portland, Oregon-based New Seasons Market (9 stores) and Ashville, South Carolina-based 15-store Earth Fare, Inc.

The fact Whole Foods Market and New Seasons Market have qualitatively different retail formats and focuses -- something that shouldn't be lost on those of you reading this who have experience in or with natural foods retailing and know about both retailers' formats and positioning -- apparently hasn't stopped the FTC from lumping the two natural grocers together in its PNOS category, which is a category we've argued in stories like this one [ 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] is irrelevant because it doesn't describe the way natural and organic foods and related consumer packaged goods products are retailed in the U.S. in 2009.

This central argument, despite the fact it fails to describe the reality of the market, forms the core of the FTC's antitrust action against Whole Foods Market, Inc. post merger with Wild Oats. It's the fulcrum, so to speak.

And despite the folly of the argument -- the FTC is sticking to it. Therefore, as we suggested in our January 29 piece, the best course of action for Whole Foods Market, Inc. (and for the FTC) is to attempt to obtain a settlement deal, thereby saving it from further legal proceedings, which it has done.

We also believe it's in the best interest of the FTC to work out a settlement deal with Whole Foods Market, Inc. Fighting the merger has become much to much of a priority, perhaps even an obsession, for the FTC in the larger scheme of its mission as one of the U.S. Federal Government's antitrust watchdog agencies, even if it believes a combined Whole Foods-Wild Oats is a monopoly in what we argue is an artificial category -- PNOS -- which in our analysis is irrelevant to how natural and organic food and grocery products are retailed in the U.S. today. [We describe the multi-format retailing of natural and organic products in this piece, as well as in numerous others linked at the "recent bibliography at the end of this story.]

Therefore, we believe the 30-day extension by the FTC is a positive and wise move for both parties, as well as consumers. In 11 days, February 16, Whole Foods Market, Inc. will report its financials for the company's first fiscal quarter of the year. Those numbers aren't going to be very good. And they won't reflect the sort of income one would expect a monopolist retailer to turn in. As a result, the Q-1 numbers will add an additional and current argument to the "Whole Foods isn't a category monopolist" argument, in our analysis and viewpoint.

Meanwhile, our sources tell us the settlement negotiations between Whole Foods and the FTC are thus far progressing in a positive way. Stay tuned.

Natural~Specialty Foods Memo (NSFM) Linkage

FTC. v. Whole Foods Market: Recent Bibliography From NSFM

February, 2009

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 Foods Retail 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) Archives

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.

Wednesday, February 25, 2009

Daily Memo: Whole Foods Market - FTC Settlement Deal Watch - 10 Days to March 6

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

The U.S. Federal Trade Commission (FTC) and Whole Foods Market continue negotiations over a settlement deal regarding the now about 18-month legal challenge by the FTC to overturn the 2007 friendly acquisition of then Boulder, Colorado USA-based Wild Oats Market, Inc. by Austin, Texas USA-based Whole Foods Market, Inc.

Earlier this month the FTC extended a halt in its legal proceedings against the deal until March 6, 2009 so the two parties could have some "breathing room" in their talks designed to reach some sort of mutually agreeable out of court settlement to Whole Foods' $565 million acquisition of Wild Oats in the summer of 2007.

Additionally, the FTC has set an April 6, 2009 date for an administrative trial, which will be held before an Administrative Law Judge chosen by the regulatory agency, in which the judge will hear legal arguments from the FTC's Bureau of Competition's lawyers and Whole Foods Market, Inc.'s legal counsel regarding the acquisition and the respective antitrust (or not antitrust) arguments from both sides. At the end of those oral arguments the FTC Administrative Law Judge will issue a ruling on the merger, assuming an out of court settlement deal isn't reach by the two parties before then, and the April 6 administrative trial goes forward.

The FTC can extend the March 6, 2009 legal action halt if a settlement deal hasn't been reached by then if it desires. If a settlement deal hasn't been reached by the two parties by March 6, 2009, the FTC could extend the legal proceedings halt if it feels progress is being made in the talks and all that's needed is more time to reach an agreement.

The FTC's case and argument: In summary

The FTC contends that a combined Whole Foods-Wild Oats is a monopoly retailer in what the agency calls the "premium natural and organic retailing segment (PNOS)" in 29 U.S. markets. As a result it says the 2007 acquisition of Wild Oats by Whole Foods Market, Inc. violates U.S. antitrust laws because in the FTC's legal view the combined Whole Foods-Wild Oats prevents competition in its self-defined category in these 29 U.S. Markets.

Natural~Specialty Food Memo (NSFM) disagrees with the FTC's position because, in summary, the entire premise of the regulator's antitrust argument rests on a false assumption of how natural and organic foods are retailed in America today, based on our experience and analysis. The FTC has created an artificial category -- PNOS -- which it then is using to justify its legal argument, in our analysis.

That false FTC premise presumes a combined Whole Foods-Wild Oats chain's competitors consist only of premium or high-end natural foods class of trade retailers such as New Seasons Market in Oregon (which ironically based on its format doesn't even fit the PNOS artificial category the FTC has created), Earth Fare in the southern U.S. and some others. That premise is wrong.

FTC argument not based on market reality

The empirical, market-based reality of natural and organic foods retailing in the U.S. today is that its a multi-corporate (and independent) and multi-format business. Major players include fast-growing natural foods class of trade chains like New Seasons Market and Earth Fare, along with Sunflower Farmers Market, Sprouts Farmers Market, Planet Organic, PCC in Washington state, Henry's Farmers Market, Natural Grocers by Vitamin Cottage and others.

It also includes hundreds of more upscale-oriented independent natural foods retailers and co-ops located throughout the U.S., including in most of those 29 markets in which the FTC argues the combined Whole Foods-Wild Oats is a monopolist natural products retailer.

Along with this segment, major players in natural and organic foods retailing today include some of America's biggest supermarket chains -- Safeway Stores, Inc. Kroger Co., Supervalue, Inc., just for starters -- as well as the two top-selling retailers of food and groceries in America -- Wal-Mart Stores, Inc. and Costco, both of which are deep in the natural-organic categories and getting deeper in terms of product selection and merchandising.

Add to this list Target, Trader Joe's, B.J.'s Wholesale and many more non-supermarket format food and grocery retailers.

Along with these segments are the big regional supermarket chains deep into natural and organic category product sales, as well as premium foods and premium fresh, prepared foods. These include Wegmans in New York, Publix in Florida, H-E-B and United Supermarkets' Market Street format in Texas, Raley's in Northern California and many more multi-billion dollar grossing regional supermarket chains located throughout the U.S., including in most of those 29 "monopolist" markets the FTC says the combined Whole Foods-Wild Oats controls in terms of the retailing of natural and organic foods.

If all these examples aren't enough, feel free to add the thousands of multi and single-store independents throughout the U.S. that put a focus on upscale food and grocery retailing, including putting a major emphasis on natural, organic and premium foods. These regional players exist and thrive -- competing head-to-head with Whole Foods Market stores -- in most U.S. market regions, including those infamous 29 "monopolist" markets. In many cases these independents actually outsell Whole Foods in the natural and organic products categories in their respective markets.

Finally, the FTC's argument fails to take into consideration the dynamic, fast-changing food and grocery retailing business in the U.S. For example, when Whole Foods Market, Inc. acquired Wild Oats in 2007, not one of the now 113 Tesco Fresh & Easy Neighborhood Market combination grocery and fresh foods markets currently open and operating existed in California, Nevada and Arizona, the three markets United Kingdom-based Tesco, which is the third-largest retailer in the world, operates in.

That's a lot of new competition in slightly over a year (the first Fresh & Easy stores opened in November, 2008) in these three states, all states Whole Foods Market has stores. The competition isn't head-to-head between the two chains. But there is only so much share of the natural and organic foods pantry, and since Tesco sells numerous category items for lower prices than Whole Foods does, it is taking some of this share, just like all of the other competitors are, regardless of specific retail format.

Additionally, giant discount retailer Target announced yesterday it is putting a new, major emphasis on food and grocery merchandising. The retailer plans to add fresh meat and produce departments and expanded perishables, groceries, household consumer packaged goods and health and beauty care selections in all of its new and remodeled discount format stores. Target has already converted one such discount format store in Illinois to the food and grocery-emphasis model and has plans to do the to many more over the next year and beyond.

Target operates some Super Target combination full-supermarket and general merchandise stores in the U.S. These stores are similar in product selection to a Wal-Mart Supercenter. However, the retailer operates many more of the discount format stores. Therefore, adding fresh foods and expanded grocery selections to these stores will have a major impact in numerous U.S. markets as Target gains critical mass in the remodels and new store openings.

Target has become a major retailer of natural, organic and premium food and grocery products over the last couple years in its stores. It's created its own store brands of premium, natural and organic food and grocery products and continues to expand those lines, as well as regularly promoting the category items in its stores and in its weekly advertising circulars.

Over the last few months, for example, Target has been regularly offering its private label premium, natural and organic brands and lines at across the board 15% and 20% discounts in its weekly advertising circular. This is direct competition to Whole Foods Market, and as Target converts more and more of its discount stores to this new food-enhanced format, the competition will get even more intense, as it has for Whole Foods Market from Wal-Mart with its major initiatives in the natural and organic categories over the last few years in its Supercenters and Sam's Club stores.

We site the Tesco Fresh & Easy and Target examples to illustrate a simple point. In the about 18 months since Whole Foods Market, Inc. acquired Wild Oats, two major retailers, both much bigger than Whole Foods, have entered (Tesco) and announced plans to enter more deeply (Target) the food and grocer retailing space, both retail chains of which are and continue to make a major impact in the premium, natural and organic categories.

A good way to view Whole Foods Market today vis-a-vis the natural and organic categories, its core selling proposition, is that it is being challenged from multiple formats -- the fast-growing natural foods chains mentioned above, the big, regional and independent supermarket chains, and the discounters like Wal-Mart, Costco, Target, Trader Joe's ect. -- each picking off bits and pieces in terms of sales from Whole Foods' core natural, organic and premium primary offering.

This fact is one reason why Whole Foods is struggling during the current recession -- many consumers are turning to these alternate format stores, including Trader Joe's, and either not shopping at Whole Foods at all or spending far less at the stores than they were just a year ago.
When the recession ends and the economy improves, Whole Foods will be challenged even more aggressively by numerous retailers.

For example, Safeway Stores ("The Market") and Wal-Mart ("Marketside") have opened their own versions of a smaller-format, upscale grocery and fresh foods market -- Safeway has one store, "the market by Vons," which it opened in the summer of 2008, currently operating in Long Beach, California, with plans to soon open a second "The Market" format store, "the market by Safeway" in downtown San Jose, California.

Wal-Mart has four of its "Marketside" stores opened in Metropolitan Phoenix, Arizona (opened in OCtober, 2008), with a fifth unit set to open in the region (in Peoria, Arizona) later this year. It also has plans to open five of the stores in Southern California. Leases for the first two in the region have already been signed, one in downtown San Diego and the other in nearby Oceanside.

The Safeway and Wal-Mart small-format stores are between 15,000 and 25,000 square feet, small for a supermarket, but about the same size as the average new natural foods store. Whole Foods even recently announced it plans to build much smaller stores, about in the 20,000 -to- 35,000 square-foot range, going forward over the next few years. For the last few years new Whole Foods stores have generally averaged about 45,000 -to- 65,000 (and some even bigger) square-feet.

The "Marketside" and "The Market" format stores, which many people describe as looking like a "small Whole Foods Market" (we've been in both formats and they do look a bit like that) sell lots of natural, organic, specialty and premium, prepared foods. The Wal-Mart "Marketside" stores even prepare the foods in-store in a kitchen and have an eating area in the store for shoppers.

But the two new formats from Wal-Mart and Safeway also have the added advantage of selling basic food and grocery items (Tide, Pampers, Coke, Pepsi) as well as natural and organic, something Whole Foods obviously doesn't do. When the economy improves, Wal-Mart and Safeway could open scores (and in Wal-Mart's case hundreds) of these upscale, small-format stores throughout the U.S., competing head-to-head with Whole Foods. They certainly have the resources to do so. Wal-Mart Stores, Inc. has annual sales of $400 billion. Safeway Stores, Inc. has annual sales of about $60 billion. Whole Foods Market has annual sales of about $8.5 billion.

A settlement deal needs to be reached

All this being said, we believe the FTC and Whole Foods Market, Inc. need to come to a settlement deal that is mutually agreeable to both parties so that Whole Foods can get back to focusing on what it does best -- merchandising and selling natural and organic groceries (and saving in its second quarter the $11 million it had to spend in its first quarter of this fiscal year on legal fees to battle the FTC) -- and so that the FTC can get out there and find a real monopoly or two to file an antitrust action against.

Countdown to March 6

As we mentioned at the top of this piece, the FTC has halted its legal action in the Whole Foods-Wild Oats merger case until March 6, which is just nine days away.

Beginning today, we will be counting-down those nine days in this column, "Whole Foods Market - FTC Settlement Deal Watch," offering news, analysis and commentary each day between today and March 6 until a settlement deal is reached -- or not reached -- by the two parties.

The daily column will be in addition to our regular reporting, writing about and analysis on the FTC v. Whole Foods Market, Inc. legal case and issue.

As of the end-of-business today there is no report of a settlement deal between the FTC and Whole Foods. But we will keep you posted in "Whole Foods Market - FTC Settlement Watch," as well as in Natural~Specialty Foods Memo (NSFM) in general.

Natural~Specialty Foods Memo (NSFM) Linkage

Below is a bibliography of the most recent -- December, 2008 to the present -- reports, stories, analysis, commentary and posts on the FTC. v. Whole Foods Market case and issue, along with directly related topics and issues, from Natural~Specialty Foods Memo (NSFM). At the very bottom of the bibliography we also include links to direct and related posts going as far back as the summer of 2007.

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 Foods Retail 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) Archives

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.

Monday, January 12, 2009

Retail Memo - Breaking News: Whole Foods Press Conference Tomorrow; Objective: Get Retailers to Comply With Subpoena; Need: Urgent

Reaching Out: FTC v. Whole Foods Market - and the Subpoenas

Whole Foods Market, Inc. will hold a press conference tomorrow (Tuesday, January 13) at 12 pm Eastern time, at which company executives will ask the nearly half of the 94 U.S. natural foods retailers it has subpoenaed for their confidential sales and related information to submit the trade secrets to its legal council in order to assist Whole Foods in its legal battle against the U.S. Federal Trade Commission (FTC).

Tomorrow's press conference, during which Whole Foods plans to offer verbal assurances to the subpoenaed natural foods retailers that their trade secrets will not be viewed by Whole Foods Market, Inc. employees, just members of its legal team, comes on the heels of a letter sent to the FTC today by company CEO John Mackey, in which he asks the members of the regulatory agency to offer assurances that the subpoena order, which states that only members of the FTC and Whole Foods' legal council can view the trade secrets, be enforced. The subpoena order states that if the information is viewed by other than authorized parties those doing so could be subject to a contempt of court violation.

Mackey also has sent a letter to the subpoenaed natural products retailers asking them to comply with the subpoena. In the letter he offers reasons for them to do so, along with offering assurances that the information will not be viewed by Whole Foods Market, Inc. employees.

Both Whole Foods and the FTC has previously assured the subpoenaed natural foods retailers that only the Whole Foods Market, Inc. legal team and FTC members and staffers are allowed to view the contents of the sales, financial and related trade secrets contained in the information submitted per the subpoena, according to its legal guidelines. However, despite those legal and verbal assurances, nearly half of the 94 natural products retailers located in 29 U.S. markets have not complied with the subpoena. The deadline for them to do so was November 4, 2008.

Whole Foods' executive vice president Jim Sud will do the briefing at tomorrow's press conference for the natural foods grocer. [we've suggested it would be a good idea for John Mackey to take a back seat in such public instances and instead have someone like co-president Walter Robb, or in this case Sud, handle the heavy lifting because there is bad blood between members of the FTC and Mackey. Perhaps Whole Foods and John Mackey agree with NSFM?] The lead outside legal counsel for Whole Foods, Lanny Davis of the Washington, D.C. office of the Orrick law firm, will participate in the press conference to address legal issues involving the subpoenas.

Whole Foods badly needs the trade secret data from the 94 competitors in those 29 U.S. markets in order to prove it isn't a monopolist in what the FTC calls the premium natural and organic retailing segment. The FTC says it is, and that argument forms the basis of the regulatory agency's continued objection to a combined Whole Foods-Wild Oats to this day, more than 18 months since the merger was completed.

The purpose of tomorrow's press conference is to ask the subpoenaed retailer's to help Whole Foods in its battle against the FTC in part for "the sake of the industry." The natural foods chain says its hand was forced by the FTC, which is why it had to subpoena the trade secrets from its competitors.

As we've been writing about extensively, one of those subpoenaed natural foods retailers, Portland, Oregon-based New Seasons Market, publicly fought the subpoena, submitting a legal brief to the FTC asking it to strike the subpoena down. An FTC Administrative Law Judge ruled in favor of Whole Foods last month and gave New Seasons until December 29, 2008 to comply with the subpoena and submit its sales information, financial data, strategic marketing plans and other trade secrets.

As we reported in this piece [Retail Memo - Breaking News: New Seasons Market Doesn't Turn Over Trade Secrets to Whole Foods Market Despite Deadline to Do So Being Today] on December 29, 2008, New Seasons did not comply with the deadline given to it by the FTC Administrative Law Judge. In addition, according to New Seasons Market CEO Brian Rohter, the nine-store Portland natural foods grocer has not yet turned over any information to Whole Foods per the subpoena.

According to our sources, as of today only about 55 of the 94 natural foods retailers have complied with the subpoena and submitted information to Whole Foods Market, Inc. Additionally, as we've previously reported, many of the retailers that have complied with the have self-edited the information demanded, excluding types of information they feared could be used against them in a competitive way.

Natural~Specialty Foods Memo (NSFM) has learned that one of the natural foods retailers that did just that is the fast-growing Sunflower Farmers Market chain, which was founded by and is headed by former Wild Oats founder Michael Gilliland. Gilliland left Wild Oats a considerable time before the Whole Foods acquisition.

According to our sources, Sunflower Farmers Market, as did a number of the other subpoenaed natural products retailers, omitted some trade secret information because of a lack of security about it not being read by Whole Foods Market, Inc. employees, which is a reasonable fear despite the assurances to the contrary.

Whole Foods has been talking privately with a number of the retailers who have yet to comply with the subpoena, including holding talks with New Seasons Market CEO Rohter and his legal counsel for the last couple weeks, attempting to assure them that the trade secret information will be kept confidential, along with trying to devise ways, including some possible compromises, to get these retailers to submit the information to Whole Foods' legal counsel, NSFM has learned.

Whole Foods may offer up some of those compromises at tomorrow's press conference as a way to encourage the retailers to comply with the subpoena.

Whole Foods Market's legal counsel needs the information right now as its needs to prepare for the April, 2009 administrative trail before an FTC Administrative Law Judge. With only about half of the information in, and incomplete at that, Whole Foods' lawyers don't currently have near enough data to use in defending the FTC's anti-competitive argument against it.

We will be covering tomorrow's press conference. Stay tuned for our report tomorrow.

Natural~Specialty Foods Memo (NSFM) Linkage: FTC v. Whole Foods:

January 12, 2008: Retail Memo: FTC Asks Judge to Force Whole Foods to Put Most of the Wild Oats' Genie Back in the Bottle Pending A Resolution of its Merger Challenge....

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 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....

December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

FTC v. Whole Foods - Linkage from the Natural~Specialty Foods Memo archives:

Click here, here and here for stories about the FTC-Whole Foods issue from our archives, including pieces about mass market and natural foods class of trade retail competitors.

Friday, January 16, 2009

Read Memo: Colorado Newspaper Columnist Joins NSFM's 'Whole Foods Market Isn't A Monopoly' Bandwagon

Natural~Specialty Foods Memo