The Federal Trade Commission settled with Whole Foods over the organic grocer's acquisition of rival Wild Oats, according to the WSJ. The deal calls for Whole Foods to sell 32 Wild Oats shops, including19 it already shut.
The FTC's press release said:
The consent order will restore competition in 17 geographic markets that were impacted by the acquisition. In addition to requiring the transfer or divestiture of all rights to 32 stores, Whole Foods also is required to divest related Wild Oats intellectual property, including unrestricted rights to the “Wild Oats” brand, which retains significant name recognition and loyalty among consumers. These assets will allow one or more Commission-approved buyers to re-establish competition with Whole Foods in the majority of the markets in which the agency alleged the acquisition would reduce competition and harm consumers through higher prices and reduced quality and services.
“As a result of this settlement, American consumers will see more choices and lower prices for organic foods,” said FTC Chairman Jon Leibowitz. “It allows the FTC to shift resources to other important matters and Whole Foods to move on with its business.”
The Commission’s June 6, 2007 federal court complaint for a temporary restraining order (TRO) and preliminary injunction (PI) and its subsequent June 28, 2007 administrative complaint for permanent relief charged that Whole Foods’ acquisition of Wild Oats would violate federal antitrust laws. The Commission charged that Whole Foods, the largest premium natural and organic supermarket chain in the United States, would unlawfully acquire its closest competitor and longtime rival, Wild Oats. In each of the markets in which they overlapped, Whole Foods and Wild Oats were each other’s closest competitor and competed directly on quality, service, and price.
“Over the past two years we never wavered in our belief that Whole Foods’ acquisition of Wild Oats was anticompetitive, and we were prepared to demonstrate in court the actual, real-world consumer harm that resulted from the transaction,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “The consent order announced today is a major win for consumers and is the result of the superb work done by all the FTC staff.”
The 32 former Wild Oats stores that Whole Foods must divest comprise 13 currently operating and 19 formerly operating stores. These stores represent a significant portion of the Wild Oats stores that Whole Foods acquired and is currently operating, as well as all of the formerly operating Wild Oats stores for which leases still exist, within the alleged geographic markets. The divestitures will provide competitive relief in the majority of geographic markets defined in the Commission’s administrative complaint and will allow consumers in these markets to once again enjoy competition among premium organic markets. The newly divested stores also could provide a “springboard” from which an acquirer might expand into other geographic markets.
The order will immediately place the responsibility for marketing and selling the stores with a divestiture trustee, who will have six months to sell the Wild Oats stores and related assets to one or more FTC-approved buyers. If the trustee has not sold the assets within six months, the Commission may extend the time provided to do so for an additional six months. The order also will require Whole Foods to maintain the viability and competitiveness of the stores until the divestiture is complete.
Blawgletter heartily agrees with Chairman Leibowitz on the importance of allowing the FTC "to shift resources to other important matters." We expressed the view last year "that antitrust regulators ought to focus on more pressing matters than grocery store sales of tofu, organic blueberries, and Sonoma chicken salad. International price-fixing cartels, perhaps?"
