Retail Memo: Whole Foods Market Wants to Depose and Obtain Internal E-Mails From FTC Commissioner, Suggesting Possible Conflict of Interest Situation

FTC v. Whole Foods Market - Whole Foods Market v. FTC

Lawyers for Whole Foods Market, Inc. at a hearing today requested a legal ruling from U.S. Federal Judge Paul Friedman which would allow the natural foods retailing chain to depose and obtain e-mail correspondence from an FTC official, J. Thomas Rosch, who is one of four current members of the regulatory agency that's trying to overturn Whole Foods' friendly acquisition last year of Boulder, Colorado-based Wild Oats Market, Inc. on anti-competitive grounds. Judge Friedman's court is in the U.S. Federal Court for the District of Columbia circuit.

Whole Foods wants to depose Commissioner Rosch, a Republican on the FTC appointed by current President George W. Bush, because he voted to investigate the merger while also briefly acting as the internal FTC administrative judge hearing the case.

Whole Foods Market also wants Judge Friedman to permit it to view e-mail correspondence from the FTC commissioner.

Whole Foods' lawyers are looking for any e-mails between Rosch and members of the FTC investigative staff, which Lanny Davis, a partner at the Washington, D.C. office of the Orrick law firm and the outside counsel who is heading up the case for Whole Foods Market, Inc., says could demonstrate a possible conflict of interest because the commissioner's acting as an internal FTC judge on the case at the time might conflict with his communicating with staffers investigating the case.

"We think there's an inference to be drawn that Commissioner Rosch was in contact with investigative staff," Davis said today, arguing that the Whole Foods legal team needs to obtain e-mails between Rosch and the staff.

Davis argued today that an appropriate remedy for FTC v. Whole Foods Market, Inc. would be to allow an FTC Administrative Law Judge to decide the case. But instead of requiring the loser to go to the four FTC commissioners, the case would be taken directly to an outside court. In other words, the federal court would decide the ultimate fate of the deal, which is what Whole Foods argues should be the remedy in its lawsuit filed earlier this month.

By statue the FTC has five members. However, it is one short at present. President-elect Barack Obama will choose a new commissioner after he takes office on January 20, 2009. Obama also will name a new chairman of the FTC. He can choose the new (fifth) member to be chairman, which is highly probable, or the President-elect can name a chairman from one of the four sitting members.

Regarding Lanny Davis' proposed remedy, the FTC has scheduled an administrative trial for February, 2009 in which an Administrative Law Judge picked by the FTC will hear the regulator's anti-competition case against Whole Foods and rule on it. Whole Foods can if it loses appeal the case to a U.S. federal court.

[See our story from earlier today for related and additional information on today's hearing at this link: 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.]

In his proposed remedy, Whole Foods Market, Inc. lawyer Davis is essentially saying all four members of the FTC would have to recuse themselves from making a decision on the matter. "Yes, we would say the entire commission would have to be recused," he said today.

We don't see this happening. The FTC has held on for too long, 16 months, to recuse themselves from making a decision on the matter, unless of course the federal court rules that they can't do so.

Judge Friedman didn't make a ruling at the hearing today on Whole Foods' request to be able to depose Rosch and to obtain copies of his internal FTC e-mail correspondence.

As we reported in our piece earlier today, Whole Foods' lawsuit against the FTC, which it filed earlier this month, was discussed and debated by lawyers for both sides today. Whole Foods Market, Inc. says in its lawsuit the FTC has denied the company due process because it has not been impartial in its case against the natural grocer's friendly acquisition of Wild Oats Market, Inc. last year.

Mark Nebeker, an assistant U.S. attorney arguing for the FTC, asked for the Whole Foods lawsuit against the government (FTC) to be dismissed. "Our view is the court doesn't have a role," he said during the hearing.

Paul Denis, outside legal counsel for Whole Foods, disagreed, arguing not only that the case belongs in the federal court, and should be decided once and for all by Judge Friedman, but also that until the case is decided by the court the FTC should freeze any further administrative action on the case, including not holding the February, 2009 administrative trial is has planned.

As we reported here, Judge Friedman ordered the FTC to provide the court with a written outline of how it expects Whole Foods Market, Inc. to take apart the now nearly full-merged into Whole Foods Wild Oats corporation and stores. The judge also said it was his hope the FTC and Whole Foods would freeze their actions until he rules, meaning he wants neither to take any further steps regarding the case. He didn't put this in the form of a legal order though.

The FTC also brought up at the hearing today something it's argued for in the past but hasn't pushed for thus far in court, which is its opinion that Whole Foods Market, Inc. should set up separate divisions to operate Whole Foods and Wild Oats until the acquisition-merger case is finally resolved. It's not clear the FTC could get a court ruling on this even if it desires.

Whole Foods has said doing so is impossible, something Whole Foods' lawyer Paul Denis repeated again today at the hearing, because for all intents and purposes the two companies are now effectively fully-merged.

Denis argued that Whole Foods has integrated functions like human resources and purchasing, as well as creating a single distribution network -- all true -- and said if the natural grocer were to have to set up two operating companies it would have to create two separate functions for every department, resulting in huge costs and inefficiencies to the company, as well as making little sense at this point in the merger's integration process, which is nearly completed.

Judge Friedman didn't seem too concerned about this. When Denis was finished making his argument, the judge replied: "So what."

Judge Friedman previously ruled in favor of Whole Foods on the deal, giving the natural grocery chain the green light to integrate Wild oats into its operations and culture.

A federal appeals court overturned that decision, tossing the case back into Judge Friedman's court now, about 16 months after the deal was first announced.

In addition to the FTC v. Whole Foods Market, Inc. core case, the judge also now is considering Whole Foods Market, Inc. v. FTC, the natural grocer's lawsuit to have the case taken away from the FTC and decided by the federal court.

Something tells us Judge Friedman is less than happy to have the case back in his courtroom. However he signaled today he plans to give the deal complete new consideration in terms of the anti-competitive arguments from the FTC, saying at the hearing that the appeals court wouldn't have sent the case back to him unless it thought doing so was valid.

Judge Friedman didn't make any rulings today besides the order that the FTC provide his court with a written road map of sorts describing what it sees as potential ways (remedies) Whole Foods Market, Inc. could take apart the combined Whole Foods-Wild oats should the natural grocer lose the case.

Reader Resources

Note: You can read new materials filed by the FTC on Friday, December 19 at the FTC Web site here .

NSFM Related story from today: 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

FTC v. Whole Foods Market - Whole Foods Market v. FTC: Recent coverage and analysis in Natural~Specialty Foods Memo (NSFM):

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 (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.

Retail Memo: Concerned With Fast-Looming FTC Hearing Date Whole Foods Re-Files Lawsuit Taking it Directly to Washington, D.C. Federal Appeals Court

FTC v. Whole Foods Market, Inc.

Late last week Whole Foods Market, Inc. re-filed its lawsuit against the U.S. Federal Trade Commission (FTC) in the U.S. Court of Appeals for the D.C. Circuit in order to sooner reach a decision on the merits of the case, according to Jim Sud, Whole Foods' executive vice president of growth and business development.

The grocery chain's lawsuit petition charges the FTC with violating Whole Foods Market's due process and equal protection rights, as Natural~Specialty Foods Memo (NSFM) has previously reported. The petition asks the federal appeals court to remove the FTC's jurisdiction over the Whole Foods-Wild Oats merger and return the case to U.S. Federal Court where Whole Foods wants the deal to be decided once and for all.

This move by Whole Foods removes the lawsuit against the FTC from the courtroom of U.S. Federal Judge Paul Friedman, who was preparing to rule on the petition. Judge Friedman will still hear and rule on other motions and aspects of the case between the FTC and Whole Foods Market, Inc.

Whole Foods' Sud says "because the FTC's administrative trial begins on April 6, 2009, Whole Foods Market decided not to spend time arguing the case on jurisdictional grounds and voluntarily withdrew it from the federal district court, re-filing it in the court of appeals."

The FTC had already indicated that if Judge Friedman ruled in favor of Whole Foods' lawsuit, removing the regulator's jurisdiction over the matter, it planned to appeal the judge's decision to the very same U.S. Federal Court of Appeals that the grocery chain has re-filed its case in. During such an appeal the FTC would still be able to hold its planned April 6, 2009 hearing/trail in which the fate of the Whole Foods-Wild Oats merger will be determined.

Therefore it appears to us that rather than take the chance of this happening, should Judge Friedman even have ended up ruling in the natural grocer's favor and then having the FTC appeal the decision, which would have meant no final decision could be reached before the scheduled FTC Administrative trail on April 6, Whole Foods Market has decided to take its chances by going directly to the federal court of appeal in hopes of getting a ruling as soon as it can prior to the April 6 FTC hearing/trail.

This is what Whole Foods' Jim Sud says in this regard: "Whole Foods Market is interested in getting to the merits of this case as quickly as possible rather than spending everyone's valuable time and resources arguing about jurisdiction. Filing with the Court of Appeals, which the FTC concedes has jurisdiction over the case, saves time and we want to move this case forward in the most expeditious manner for all concerned."

As we've previously reported, In its petition, Whole Foods Market asks the Court to bar the FTC from conducting a trial that would violate the company's due process rights because the FTC has already publicly prejudged the case against Whole Foods Market and has refused to give the company enough time to prepare for the administrative trial.

The petition also alleges that companies under the jurisdiction of the FTC, like Whole Foods Market, are subjected to a different standard of justice than those under the U.S. Department of Justice, which does not engage in further litigation if it loses a preliminary injunction. In this case, the FTC lost a preliminary injunction but started an administrative trial 18 months later. A Congressionally-mandated commission has called for abolishing the dual system that allows the FTC to conduct its own administrative trial while the Department of Justice can only proceed in federal court.

It's our analysis that Whole Foods' outside legal council, led by Washington, D.C.-based lawyers Lanny Davis and Paul Denis, the attorney who will be arguing the natural grocery chain's case at the April 6 FTC hearing/trial, believe the petition won't be granted and that the hearing will go forward. We suggest this because all indications are that will be the case, based on our extensive research on FTC v. Whole Foods Market, Inc. at this point in time. This is our independent analysis. None of the members of Whole Foods' outside legal council has suggested to us it's their opinion.

Whole Foods' outside legal council has about two months to prepare for the FTC Administrative hearing/trial. Obviously the natural grocery chain's lawyers would like to have a ruling on the lawsuit petition as soon as possible because if, for example, they were to get a ruling in the company's favor by the appeals court that means instead of preparing for the FTC Administrative hearing they would need to rapidly shift gears and prepare for a hearing back in the courtroom of Federal Judge Paul Friedman, which is where the case would most likely go if the federal appeals court removes the FTC's jurisdiction. That's why it makes logical sense to us that Whole Foods Market re-filed the case in the federal appeals court.

Once the federal appeals court rules, if it conversely rules in the FTC's favor, the next major step in FTC v. Whole Foods Market, Inc. will be the April 6, 2009 Administrative hearing trail. Our analysis is that this is what will happen. And as mentioned above, if the appeals court rules in favor of Whole Foods' petition, a date would then be set to begin holding hearing in U.S. Federal Court in Washington, D.C., likely back in Judge Friedman's courtroom.

Stay tuned.

Natural~Specialty Foods Memo (NSFM) Reader Resource

FTC. v. Whole Foods Market, Inc. - NSFM recent bibliography:

January 16, 2008: Retail Memo - Breaking News: Portland's New Seasons Market and Whole Foods Market, Inc. Reach Agreement; New Seasons Will Provide Trade Secrets....January 16, 2008: 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>Thursday, 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....

Monday, January 12, 2009: Retail Memo - Breaking News: Whole Foods Press Conference Tomorrow; Objective: Get Retailers to Comply With Subpoena; Need: Urgent>Monday, January 12, 2009: 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 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.

Retail Memo - News & Analysis: Gelson's Chain Challenges Whole Foods' Subpoena For Trade Secrets; FTC Says No Like it said to New Seasons Market

FTC vs. Whole Foods Market, Inc. - and the Subpoenas

A U.S. Federal Trade Commission (FTC) Administrative Law Judge has denied a legal motion "For a protective order to quash or limit subpoena from Whole Foods Market, Inc." from the only other retail chain, Southern California-based Gelson's Market, out of the 93 natural and premium food and grocery retailing companies subpoenaed for various sorts of sales, financial and other trade secret information by Whole Foods Market in its battle against the FTC's legal case to overturn the 2007 Whole Foods-Wild Oats merger.

Basically the Gelson's legal motion/petition, like the one filed by Portland, Oregon's New Seasons Market, which also was denied by the FTC, asked the FTC to either kill the demands for proprietary information contained in the Whole Foods' subpoena completely and if not to then limit the demands, issuing a protective order which would allow the company to not submit some of the information demanded which it believes could harm it from a competitive standpoint.

Of particular concern to Gelson's are demands in the subpoena in which Whole Foods wants information from the 93 food retailing companies about their strategic growth plans in each of their respective markets. The FTC Administrative Law Judge ruled that Gelson's didn't show cause in its petition that such information would harm the company. Therefore he ruled against the grocery chain, ordering it to comply with the original terms of the subpoena.

As we've reported on previously, Portland, Oregon-based New Seasons Market, a nine-store natural foods chain was, until we recently discovered the Gelson's petition, the only one of the 93 retailers to challenge Whole Foods' subpoena with the FTC. New Seasons ultimately lost its legal challenge and was ordered by the FTC to comply with the subpoena. The Portland natural grocery chain failed to do so by the required date. However it reached a negotiated agreement with Whole Foods Market, Inc. and has now submitted the mutually agreed upon trade secret information.

Gelson's, which was one of more than half of the 93 retailers who didn't comply with Whole Foods' subpoena by its November 4, 2008 deadline, has been ordered by the FTC Administrative Law Judge to now do so post haste.

[You can read the full ruling at this link: Administrative Law Judge's Order on Non-party Gelson's Market's Motion for Protective Order or to Quash or Limit Subpoena from Whole Foods Market, Inc.]

The arguments to quash or limit the subpoenas made in the legal motions by lawyers for Gelson's and New Seasons were very similar.

What isn't similar though is that Gelson's is part of a publicly-owned and traded corporation, Arden Group, and therefore is a public supermarket chain, unlike New Seasons Market, which is a privately-held company. This means much of the information demanded in the Whole Foods Market subpoena -- sales and related financial data for example -- is already of public record by law. However, it's that non-public information such as plans to open new stores and the like, that Whole Foods' legal council says it must have, along with all the other information, from the 93 retailers. Privately-held companies like New Seasons aren't required by U.S. law to report there sales and profit information publicly like public companies are.

In addition to operating supermarkets under the Gelson's banner in Southern California, Arden Group also operates a few stores under the Arden-Mayfair banner in the region. In addition to its supermarket operations, holding company Arden Group has real estate and other related business interests.

There are 18 Gelson's supermarkets in Southern California. The stores sell a full range of food and groceries just like a regular supermarket does but put a major emphasis on selling specialty, gourmet, premium, ethnic and natural foods in an upscale store setting. [Learn more here.]

The central part of Whole Foods' argument as to why it's not a monopoly in what the FTC calls the "premium natural and organic retailing segment" in the 29 U.S. markets the regulator says it is is because the natural foods grocery chain not only competes with other natural foods class of trade retailers (like Portland's New Seasons Market) but with upscale supermarket chains such as Gelson's and numerous others across the U.S. that focus on the very same types of products Whole Foods does in its stores and are thus direct competitors.

This is an argument we've made since last summer -- long before Whole Foods' legal counsel came up with the idea of proving this by issuing subpoenas to the 93 retailers, a number of which are similar in format to Gelsons -- arguing that the FTC, in opposing the merger so strongly, has failed to understand the true nature of natural and premium food retailing in the U.S. today. That reality is that it is a multi-format, highly competitive business in which an increasingly variety of retailers are competing against Whole Foods for a share of the natural, organic and premium food category pie. [We suggest reading our January 15, 2009 analysis piece [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] for an overview of our argument.]

As we've also previously said, we completely understand and respect why New Seasons Market, and now Gelson's, challenged the subpoenas. Were we in their respective positions we likely would have done the same if unable to work out an agreement with Whole Foods.

Whole Foods' plan and strategy is to compile all of the data from these 93 retailers into a competitive analysis vis-a-vis itself in these 29 markets where the FTC says it holds a monopoly post merger in what the FTC has defined as the "premium natural and organic retailing segment." The retailer then plans to use this analysis to demonstrate at the scheduled April 6, 2009 FTC Administrative trial, where the fate of the merger will likely be decided, that it has more than enough competition -- from natural foods class of trade retailers, upscale/specialty supermarket chains and others -- in each of these markets.

The danger to Whole Foods though is that the burden of proof in the FTC Administrative trial is completely on the company. It must demonstrate to the Administrative Law Judge that the natural foods grocery chain isn't a monopoly, under FTC definitions no less, in every single one of the 29 markets. The Administrative Law Judge technically can rule against the entire merger if he believes Whole Foods has failed to prove its case in just one or two markets. That's a very difficult standard to meet.

As a result, without the proprietary information from the 93 retailers, at least two dozen of which have yet to comply with the subpoena as of early last week, according to Whole Foods' legal council Lanny Davis, the natural foods grocery chain can build a case to defend itself against the FTC's 29 market monopolist argument.

Therefore, as we've been writing about, this is why Whole Foods Market, Inc. is putting so much effort, including expensive legal talent, into obtaining the information from these 93 subpoenaed retailers. And the clock is running fast. April 6 is coming up very soon. Whole Foods still must obtain the information from these two dozen or so retailers, and must still compile all of the information into a legal brief before April 6.

On January 14, Whole Foods Market, Inc. took a number of steps designed to encourage those retailers who've yet to comply with its subpoena to do so. [Read about those measures at this link: Retail Memo: Whole Foods Offers Carrot and Stick to Retailers That Have Yet to Comply to Subpoena For Trade Secret Data and Information.]

It's our analysis that those measures, combined with the FTC's Administrative Law Judge's ruling against New Seasons' and Gelson's -- the only two of the 93 retailers we're thus far aware have challenged the subpoena -- will likely result in most of those remaining retailers' submitting the information demanded in the subpoena to Whole Foods' lawyers.

However, many of the retailers who have already submitted information, have self-edited some of the demands, those they believed were most proprietary to their respective business activity. Whole Foods Market also is attempting to get those retailers to submit the omitted information. That could be more difficult to achieve.

What is clear though is that Whole Foods wants and needs this information so badly it's willing to compromise, in the case of New Seasons market and perhaps others thus far, as well as to play hard play if needed.

The stakes are high. The unwinding of the merger could cost an already struggling Whole Foods much -- financially, in market share, and even possibly in terms of who has control of the company in the future. Stay tuned.

Reader Resource - Linkage:

Below is a bibliography of recent stories and posts published in Natural~Specialty Foods Memo (NSFM) on the FTC. v. Whole Foods Market, Inc. legal case and merger issue:

January, 2009:

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....

Thursday, 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....

Monday, January 12, 2009: Retail Memo - Breaking News: Whole Foods Press Conference Tomorrow; Objective: Get Retailers to Comply With Subpoena; Need: Urgent....Monday, January 12, 2009: 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, 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.

Retail Memo: An Argument in Favor of the FTC in FTC v. Whole Foods Market, Inc. -- Or At Least Against Whole Foods' Legal Tactics

FTC v. Whole Foods Market, Inc.

Natural~Specialty Foods Memo (NSFM) argues that in the FTC v. Whole Foods Market, Inc. case, in which the U.S. Federal Trade Commission is attempting to unwind the 2007 merger between Whole Foods and the former Wild Oats Market, Inc., that the FTC is wrong in its argument that a combined Whole Foods-Wild Oats represents a monopoly in 29 U.S. markets in what the regulator calls the "premium natural and organic retailing segment."

In fact, we've more than once said the entire argument and legal case against the deal is basically pure folly.

Our primary argument is two-fold: The "premium natural and organic retailing segment (PNOS)" is today a creative fiction. It's not relevant to how natural and organic foods are retailed today in the U.S. The retailing of category products is a multi-format, highly competitive business. Players range from mega mass-merchandisers Wal-Mart, Target and Costco, to national supermarket chains Safeway Stores, Inc. Kroger and Supervalu (as well as scores of big, medium and small regional supermarket chains and independents), along with numerous small, regional natural foods retailing class of trade chains and thousands of independents. Then there's online retailers like Amazon.com, FreshDirect (and others) and other emerging formats, not to mention Trader Joe's and a few others.

Since the segment (PNOS) created by the FTC is fiction, and sense natural and organic foods retailing today is a multi-format business that includes numerous players much bigger than Whole Foods, as well as many more smaller but just as good, the entire premise of the FTC's case really is a fiction.

In addition, since the deal in the summer of 2007, Whole Foods Market, Inc. has seen a drop in its net income in its latest quarter by over 40%, seen the value of its stock drop by a whopping 70-plus percent, had to sell of 17% of the company to the Leonard Green & Partners private equity firm, getting $465 million -- about 60% less than 17% of the company was worth about 18 months ago.

Additionally, the natural grocery chain has laid off about 100 employees at its corporate headquarters (in late 2008), froze hiring at the headquarters, cut back on hire at store-level, and has reduced the number of new stores it plans to open this year by over half -- from about 35 to about 15. [This is a brief summary of our argument. See the bibliography at the bottom of this piece for numerous, much more elaborate arguments on these points.]

Monopolists have to pass the empirical smell test. Based on its performance since the merger Whole Foods looks not like a monopolist but rather more like a struggling retailer and company. When is the last time you observed a monopolist that has lost 70% of its corporate value in the last 18 months?

Despite our position, we constantly are looking for articles that take the opposite point of view -- that agree with the FTC that Whole Foods market is a monopolist in the 29 U.S. markets the regulator says the company is. We can never find any. Its also very difficult to find people, including smaller natural foods chains and independent retailers, that think Whole Foods is a monopolist post the Wild Oats merger.

However, today we found an article from the Washington, D.C-based legal Web site Corporate Crime Reporter that agrees with the FTC position -- sort of. As you will see when you read it, the piece primarily attacks Whole Foods' legal strategy and team more than it offers a solid argument against the merger. It does however link to another article, actually a legal brief, that does make a legal argument against the deal.

We bring you that article (in italics) below:

CORPORATE CRIME REPORTER
Whole Foods, Lanny Davis, and the Attack on the FTC
23 Corporate Crime Reporter 3, January 21, 2009

Whole Foods has merged with Wild Oats.

The Federal Trade Commission says the merger was illegal.

The FTC wants to unwind the merger.

Whole Foods is fighting back hard.

It has hired Orrick partner Lanny Davis to beat back the FTC.

Davis practices not just law, but as he puts it – legal crisis communications.

What is that?

“Balancing the perspectives of litigators with the need to communicate effectively with the media and the public,” Davis says.

Translate – legal public relations.

So, for example, last week, Whole Foods...

[Click here to read the full article from the Corporate Crime Reporter Web site.

NSFM Reader Resource

Below is a bibliography of recent stories and posts published in Natural~Specialty Foods Memo (NSFM) on the FTC. vs. Whole Foods Market, Inc. legal case and merger issue:

January, 2009:

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....Thursday, 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....

Monday, January 12, 2009: Retail Memo - Breaking News: Whole Foods Press Conference Tomorrow; Objective: Get Retailers to Comply With Subpoena; Need: Urgent....Monday, January 12, 2009: 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, 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.

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.]