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Whole Foods fights back against FTC in rare corporate move

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With the FTC, argues Whole Foods Markets (NYSE: WFMI), it's personal. Ever since the federal agency began its review over the company's merger with Wild Oats Markets about a year and a half ago, Whole Foods says, the deck has been stacked against the organic and natural foods store chain. What's more, the FTC has continued to pursue Whole Foods to undo its deal even though the merger closed in August 2007, after the FTC lost its first challenge to the merger in federal court. Just last week, reports of an intrusive subpoena had many watchers crying foul over Whole Foods' behavior; this week, the FTC is getting its own harsh spotlight.

Whole Foods is appealing to Congress, and yesterday filed a lawsuit to stop the FTC from continuing its challenge to the long-completed merger. The FTC is running a rigged game, says CEO John Mackey, and what's more -- "we would be better off today if we hadn't done this deal" with Wild Oats. With the depressed economy (and, grocery analysts like myself would argue, Whole Foods' inability to develop a cohesive mission that resonated with sustainability-conscious shoppers), Whole Foods sales have been bottoming out, and the debt the company accrued to complete the merger is now weighing heavy on the balance sheet.

Indeed, this battle over a minority of the grocery market -- a minority the FTC inexplicably argues is called "premium and natural grocery" and is unfairly dominated by Whole Foods -- has gone on long enough.

The big discount grocery chains are happily selling organic and natural foods; farmer's markets and food co-ops are offering plenty of competition; and private, "premium" grocery chains like Wegman's, Dean & Deluca, New Seasons, Sprouts Farmers Market, Fresh Market and more seem to be growing happily despite Mackey's sad sack and the FTC's alarmism.

I don't call Mackey an organics Messiah here; he's no innocent lamb having never allowed the barest twinge of anti-competitive behavior to cloud his fairdealing psyche. But the FTC is wrong to continue to pursue Whole Foods over a bell already rung. Let's call an end to this already and find some markets that truly are struggling for competition; and when you've lost, FTC, can't you please just take your ball and go home?

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Last updated: July 09, 2009: 10:21 PM

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