The Federal Trade Commission and Whole Foods are back to wrasslin' this week. The grocery chain is looking for lots of help from other food purveyors, while the FTC seemingly seeks to resurrect Wild Oats Market, which merged with Whole Foods in 2007.
In a teleconference Tuesday, Whole Foods Executive Vice President Jim Sud said the company has begun sending competitors across the country requests for documents that Whole Foods hopes will show that the organic grocery chain competes with grocery stores that do not have an organic focus. Letters are going out to 93 companies.
“This is not something we want to do. This is something we’ve been forced into because we’re having to defend the merger in 29 separate markets,” Sud said.
Any documents turned over to Whole Foods would be protected by a confidentiality order agreed to by Whole Foods and the FTC, Sud said. The order specifically bars Whole Foods employees from reviewing the documents, including Whole Foods’ general counsel. Only Paul Denis, a partner at Dechert hired to defend the company in the FTC’s administrative proceeding, now scheduled for April 6, and other outside counsel would have access to the documents.
Lanny Davis, a partner at Orrick, Herrington & Sutcliffe representing Whole Foods, said that many companies are cooperating voluntarily, but others have been served with subpoenas demanding access to documents that “would show that they do compete with Whole Foods Market and should be part of the market definition the Federal Trade Commission has narrowly defined.”
The request for third-party documents comes on the heels of a move by the FTC to halt further integration of Whole Foods and Wild Oats.
According to a brief filed Monday in the U.S. District Court for the District of Columbia by Matthew Reilly, assistant director of the FTC’s Bureau of Competition, the FTC is proposing an immediate stay of integration as interim relief while the federal court case is pending and is asking Judge Paul Friedman to order Whole Foods to rebrand all former Wild Oats stores.
“Assuming that Whole Foods agrees to complete the equities hearing before this court in a timely manner, we believe that this limited relief (a stay of further integration) is a reasonable way of maintaining the Wild Oats assets until this court concludes a hearing on the equities,” Reilly wrote.
Davis said that request doesn’t make sense because the two stores have already fully integrated. “In papers filed with the court, the FTC makes it seem like there needs to be a standstill agreement to keep the merger from going through, but that’s not true. It’s done,” Davis said.