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

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

Portland, Oregon's New Seasons Market reached a compromise today with Whole Foods Market, Inc. to comply with its subpoena for New Seasons' proprietary sales, financial, marketing and other trade secret information, according to Brian Rohter, CEO of the nine-store independent natural foods grocer.

Below (in italics) is what Rohter said today about the agreement with Whole Foods in the New Season's Market Blog:

Friday, January 16, 2009

We're Finally Getting Back To Minding Our Own (Local) Business
Thank you, thank you, thank you. I'm always so impressed by the power of a united community. Because of all of the voices that chimed in from the Portland area and from all over the country, we've been able to bring the issue with Whole Foods to a resolution that works for us.

As you probably know, we've never taken a position on the dispute that Whole Foods has with the Federal Trade Commission (FTC) about their takeover of Wild Oats. We tried really hard to stay out of the crossfire of this fight, because it really has nothing to do with us. Obviously, we wish we weren't being forced to give any of our internal financial records to one of our competitors, but we're pleased that a compromise was reached. As part of the settlement, I promised not to disclose the actual terms of the agreement, but I can tell you that there is a big difference between what the original subpoena demanded and what we're going to actually turn over.

Thanks again for your help in protecting the future of New Seasons Market. We're excited about getting back to minding our own (local) business.

Whole Foods Market, Inc. co-president Walter Robb, who has a long time personal as well as professional relationship with New Seasons Market CEO Brian Rohter, had been negotiating with Rohter since about late November, 2008 about working out a compromise in which the Portland natural grocer could comply with Whole Foods' subpoena, yet still protect what it feels are its most sensitive trade secrets. We've reported this previously in the Blog.

The negotiations didn't go anyplace until about two weeks ago when Whole Foods, via Walter Robb, started to make some concessions in New Season's favor, Natural~Specialty Foods Memo has learned.

Obtaining the information from New Seasons Market has been key for Whole Foods Market because the Portland natural foods grocer, along with the southern U.S.-based Earth Fare natural food chain, are considered in the FTC case against the Wild Oats acquisition to be Whole Foods Market, Inc.'s two main regional competitors.

As we reported on Wednesday, January 14 in this piece [Retail Memo: Whole Foods Offers Carrot and Stick to Retailers That Have Yet to Comply to Subpoena For Trade Secret Data and Information] Whole Foods Market, Inc. decided to reach out to the numerous retailers, out of the 93-94 subpoenaed for their respective trade secrets, who have yet to comply with the legal demands, appealing to them using a carrot (positive and assuring) and stick (legal threat) approach.

It was this action, using mostly the carrot approach, which included a number of compromises by Whole Foods from the original demands in the subpoena, that led to the agreement between New Seasons and Whole Foods Market, which has now led CEO Rochter to comply with the subpoena and release the information to Whole Foods, based on certain stipulations and exclusions given him and New Seasons by Whole Foods Market, Inc.. Whole Foods' Walter Robb was the key back channel to Brian Rohter and New Seasons in the negotiations, we've learned.

It's our analysis that the agreement between Whole Foods Market and New Seasons will likely open the door further for the other subpoenaed retailers who've yet to comply to be more open to doing so. Whole Foods has now indicated its much more open to working out individual compromises with retailers on the matter. In addition, as we reported in the January 14 story, Whole Foods has asked the FTC to enforce the legal sanctions of non-compliance (the stick) in the subpoena. Those sanctions include possible fines, along with being charged with contempt of court for not complying with the subpoena.

Additionally, New Seasons Market has been to date the only retailer, out of those among the 93-94 that haven't complied with the subpoena, that has publicly fought (and lost) the subpoena and spoken out in public about doing so. Many of the subpoenaed retailers that haven't complied have been watching what New Seasons Market would do closely. Therefore, now that New Seasons Market has worked out an agreement with Whole Foods, we think some of the other retailers will be more open to doing so as well.

The original date for the 93-94 subpoenaed retailers to comply was November 4, 2008. Only slightly more than half had complied by late December, 2008, as we've previously reported. At last Tuesday's press conference, Whole Foods' lead outside legal counsel Lanny Davis, a partner at the Orrick law firm in Washington, D.C., said the Austin, Texas-based natural grocery chain sent letters of compliance to "a couple dozen" of the retailers that have failed to comply. Our sources say there are more that two dozen (closer to about three dozen) that have yet to comply, but that Whole Foods is targeting those it needs the data and information from the most in order to build its case that there's plenty of competition against it in the 29 U.S. markets the U.S. Federal Trade Commission (FTC) argues Whole Foods holds a monopoly in.

Obtaining this information -- and fast -- is key for Whole Foods Market's outside legal counsel because it must analyze, compile and make sense of it before the scheduled April 6, 2009 FTC Administrative hearing/trail which will determine the fate of the merger. The competitive retailer information is going to be the backbone of Whole Foods' legal argument against the FTC.

For New Seasons Market it appears it's direct and time consuming involvement in FTC v. Whole Foods Market, Inc. is likely over, unless there's a breach of its trade secret information like happened in the past, of course. However, since one concession Brian Rohter got from Whole Foods involved some information the natural grocer thought to be its most sensitive, the risk even if such information did get released is much less now for Rochter and New Seasons. Let's just say CEo Rochter's comfort level has dramatically increased in the last two days.

Meanwhile, obtaining the key information from New Seasons Market is an important but small win for Whole Foods.

It's big challenge is till to come -- proving it's not a monopolist, as the burden of proof is on the natural foods chain to do so. And it appears the FTC, despite our analysis being that it's completely wrong in its argument that a combined Whole Foods-Wild Oats poses a monopoly -- for reasons we've laid out here -- seems determined to waste U.S. taxpayer's money, and use FTC human and material resources in a foolish manner, by continuing to pursue its legal case against Whole Foods Market, Inc., which is designed to unwind the combined Whole Foods-Wild Oats.

But at least New Seasons Market's Brian Rohter and his team can now get back to selling natural and organic foods and groceries and competing against Whole Foods Market in the Portland, Oregon Metropolitan market.

Natural~Specialty Foods Memo (NSFM) Reader Resources

Recent NSFM coverage and analysis on the Whole Foods-New Seasons Market subpoena issue:

>January 14, 2008: Retail Memo: Whole Foods Offers Carrot and Stick to Retailers That Have Yet to Comply to Subpoena For Trade Secret Data and Information

>January 12, 2008: Retail Memo - Breaking News: Whole Foods Press Conference Tomorrow; Objective: Get Retailers to Comply With Subpoena; Need: Urgent

>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 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 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 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 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 7, 2008: 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 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: 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: 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.

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.

Retail Memo - Breaking News: New Seasons Market Doesn't Turn Over Trade Secrets to Whole Foods Market Despite Deadline to Do So Being Today

In our story yesterday (Sunday, December 28) [Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel], we reported that today (Monday, December 29) is the deadline Federal Trade Commission (FTC) Administrative Law Judge Michael Chappell has given Portland, Oregon-based New Seasons Market to comply with Whole Foods Market, Inc.'s subpoena for the nine-store natural grocer's financial records, sales data, strategic marketing plans and related trade secrets.

We can now report that as of the end of business today, New Seasons Market has not submitted the information demanded in the subpoena to lawyers for Whole Foods Market, Inc., as directed by the FTC judge.

This has been confirmed by Brian Rohter (pictured at left), the CEO of New Seasons Market.

Rohter says he can't talk about any other aspects of the subpoena or the legal issue at present, on advise of his legal counsel.

We can report however that New Seasons Market has no plans to turn over the information demanded by Whole Foods Market, Inc. on Tuesday, December 30. And since Wednesday is New Year's Eve, and Thursday and Friday are part of the four day New Year's Day holiday weekend, don't expect to see New Season's submitting its trade secrets to Whole Foods' legal counsel at all this week.

New Season's CEO Rohter says he hopes to have more details regarding the subpoena issue as soon as he can. Right now though he says he's essentially being kept on a short leash by his legal counsel in terms of discussing the issue.

What we do know is that Rohter and other members of the New Seasons Market management team huddled with their lawyers last week in an attempt to come up with a strategy to fight the FTC Administrative Law Judge's ruling that the Portland natural grocer turn over its trade secrets to Whole Foods' legal counsel by today.

Therefore it's possible the natural grocer and its legal counsel have come up with such a strategy but can't announce it publicly as of yet.

Stay tuned.

Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel

Whole Foods Market, Inc., New Seasons Market, and the Subpoenas

Tomorrow (December 29, 2008) is the deadline Federal Trade Commission (FTC) Administrative Law Judge Michael Chappell has given nine-store Portland, Oregon natural foods grocer New Seasons Market to turn over its trade secrets to lawyers for Whole Foods Market, Inc. [Here's a link to the ruling.]

As Natural~Specialty Foods Memo reported on December 17 in this story [Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets], the FTC Administrative Law Judge ruled against New Seasons' appeal of the Whole Foods' subpoena, ordering the natural grocer to submit its sales, financial and other proprietary information called for in the subpoena to Whole Foods' lawyers by tomorrow.

The next day, December 18, we reported in this piece [ Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Grocer Must Turn Over Trade Secrets to Whole Foods Market], that Brian Rohter, the CEO of New Seasons Market, said he was huddling with his lawyers following the Administrative Law Judge's ruling, looking for ways to continue fighting the subpoena.

As of Friday, December 26, New Seasons hadn't filed any formal legal appeal to the FTC, according to our sources; nor have we been able to find anything legally filed.

Therefore, tomorrow is S (subpoena) Day for Portland's New Seasons Market. The natural foods retailer can either comply with the judge's order and submit its trade secrets to Whole Foods' lawyers, which is something CEO Rohter has been strongly against doing, or it can join a number of the other 92 natural products retailers issued subpoenas and not comply with the legal documents. As we reported here, as of last week only about 50 of the 93 retailers issued subpoenas by Whole Foods Market, Inc. have complied. The deadline to do so was November 4, 2008.

Portland's New Seasons Market is the only one of the 93 retailers to date that has publicly opposed the subpoenas and filed an appeal with the FTC. The others who haven't complied have done so silently, merely refusing to submit the information. Additionally, a number of the 93 natural products retailers that have complied with Whole Foods' subpoena for their trade secrets, have self-edited the information submitted, thus only partially complying with the demands made in the legal documents.

Since New Seasons is the only one of the 93 retailers to oppose the subpoenas and take a public stand in doing so, it is flying above the radar (the others that haven't complied are flying below the radar screen in terms of visibility on the issue) in terms of its decision tomorrow. There are certain negatives as well as certain benefits of doing so.

Most of these 93 natural products retailers are privately-held companies like New Seasons Market is. As such, they aren't required to publicly disclose annual sales and profit information, which the Whole Foods subpoena calls for.

But the subpoena calls for far more than this data. It also demands the retailers locate, make copies of, and submit to Whole Foods' any internal company e-mails that might discuss competitive issues as they relate to Whole Foods Market, Inc. in each of the 93 retailers' respective markets.

In addition, the Whole Foods' subpoena demands the retailers disclose in writing their respective strategic plans, including any new stores they plan to open in the next few years.

Whole Foods says obtaining this information is essential in order for it to demonstrate that a combined Whole Foods-Wild Oats is not a monopoly in any U.S. Market.

Late last week, New Seasons Market CEO Brian Rohter indicated the natural foods grocer might have something more up its sleeve in terms of continuing to fight the demands made in the subpoena.

We should know tomorrow. Stay tuned.

Reader Resources

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

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.

Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets

A U.S. Federal Trade Commission (FTC) Administrative Law Judge today rejected Portland, Oregon-based New Seasons Market's legal request to quash Whole Foods Market, Inc.'s subpoena of the nine-store natural grocery chain's private sales and financial records, along with other related proprietary information, which Whole Foods says it needs to fight its case against the FTC, which is seeking to overturn its 2007 acquisition of Wild Oats Market, Inc.

"The implied allegations that Whole Foods may be using the document requests to gain a competitive advantage over New Seasons are without support," wrote Administrative Law Judge D. Michael Chappell in his decision today.

Judge Chappell said in his ruling that New Seasons' "information would be protected by the and that complying with Whole Foods' subpoena and turning over the information was not a burden" on the Portland, Oregon natural foods retailer.

In its motions to quash the subpoena, New Seasons Market argued doing so presented an extreme financial burden to the company, saying its lawyers told it gathering the information required could cost the grocer as much as $250,000.

Additionally, in its legal brief, New Seasons Market said: "If New Seasons is required to produce the information Whole Foods seeks, it would provide Whole Foods with a blueprint to New Seasons' success and the means for Whole Foods to engage in anti-competitive conduct against one of its primary competitors in the Portland market."

In filing the legal challenge against the subpoena with the FTC, New Seasons also argued that it should not have to turn over its most closely held business secrets to Whole Foods, which, it said, "has a history of taking a predatory approach toward its competition."

The natural grocer also said in its legal challenge to the subpoena that it was not confident that its trade secrets would be protected as promised, describing an incident in which the FTC accidentally disclosed confidential business information earlier in the case, while other sensitive information was given to a Whole Foods in-house lawyer.

New Seasons Market CEO Brian Rohter said earlier this month, after filing the legal brief with the FTC, that the grocer was afforded no guarantees by either Whole Foods or the FTC that members of Whole Foods Market, Inc.'s executive team wouldn't be able to view his company's sales, financial and related information if New Season's complied with the subpoena.

Whole Foods' lawyers, along with the company's co-president Walter Robb, have said the law is clear that no Whole Foods Market, Inc. employees other than its legal council can review New Seasons' information -- and that they won't. The judge today sided with them.

The FTC administrative law judge rejected all of New Seasons Markets' arguments today though, and has ordered New Seasons Market to comply with Whole Foods' subpoena and submit the information, which includes any plans the natural foods grocer has to open additional new stores in the Portland market in the future.

As we've reported, Whole Foods Market, Inc. issued the subpoenas to 93 natural foods retailers in about 29 U.S. markets where the FTC argues the merged Whole Foods-Wild Oats has a monopoly in what the regulator calls the "premium organic retailing segment." as a way to argue its case that the FTC is wrong at an administrative trial the FTC has set for February of next year. [Note: in some previous pieces on the issue we've written Whole Foods Market, Inc. has issued subpoenas to 95-96 retailers, a number that came from a Whole Foods Market senior administrative staff member originally. We are told 93 is the correct number.]

Meanwhile, as we've been writing about extensively, Whole Foods' has filed a lawsuit against the FTC arguing the regulator has deprived the Austin-Texas-based natural foods chain of its due process rights in how it has gone about its case against the Wild Oats' acquisition since the summer of 2007.

Whole Foods' is asking a U.S. federal court to stop the FTC from holding that February, 2009 administrative trial, and for the federal court to hear the case and decide once and for all whether the acquisition holds or is overturned.

A U.S. federal court in Washington D.C. has twice given Whole Foods the green light that it could go forward with the acquisition-merger. However, the federal rules on mergers and acquisitions as they pertain to the FTC allow the regulatory agency to reopen such cases and seek appeals of previous court decisions on acquisitions or mergers. That is just what the FTC did earlier this year, it reopened its administrative case against Whole Foods and then won the right from a federal court to go forward and hold its administrative hearing/trial on the acquisition in February.

If Whole Foods loses the FTC administrative trial in February (assuming the federal court doesn't rule in favor of Whole Foods in its current lawsuit against the FTC's holding the trial and order the decision to be made by a federal court as the grocer is requesting) and the acquisition is overturned, it can appeal that decision by the FTC Administrative Law Judge to a U.S. federal court.

In terms of the New Seasons Market aspect of the case -- today's ruling that it must comply with the subpoena -- the Portland natural grocer must either turn over its sales and financial records and related information to Whole Foods' lawyers or not do so and be in legal violation of the judge's order issued today.