Theodore Olson says antitrust law has been turned on its head by a panel of judges on the U.S. Court of Appeals for the D.C. Circuit in Federal Trade Commission v. Whole Foods Market Inc..
The former solicitor general writes that the panel, which ruled 2-1 in favor of the FTC’s effort to block the merger between Whole Foods and Wild Oates in July, revived outdated cases that had no business interpreting modern economic issues.
Olson, who filed a motion for leave to support Whole Foods' petition for an en banc hearing on Monday, wanted to join the case because he thought Judge Janice Rogers Brown, who wrote for the panel, used outdated cases to reach her conclusion that the district court had underestimated the FTC's likelihood of success on the merits.
Paul Denis, a partner at Dechert serving as lead counsel on the case and who wrote Whole Foods' request for an en banc hearing, says the circuit court's ruling was wrong on "a number of material aspects."
"Judge Brown simply got it wrong," Denis says.
In addition to Denis, the case pairs Olson with his political foil Lanny Davis, a partner at Orrick, Herrington & Sutcliffe, serving as co-counsel.
"I called Ted as he was preparing for oral argument for the Supreme Court and told him I wasn't taking no for an answer. This case is hugely significant," Davis says. "I'm an ACLU card-carrying Democrat, and Ted is certainly not that, but for this, left and right came together."
Olson was out of the office and couldn't be reached for comment.
In his reply, Olson says the panel overlooked its own precedent when reaching its decision.
“As if in a time warp, the Panel eclipsed decades of leading cases — including this court’s decision in Heinz and Baker Hughes, which require an analysis of the competitive effects of a merger under modern economic principles — and dusted off a series of cases dating back to the 1960s that have long been discarded by modern antitrust decisions,” writes Olson, a partner at Gibson, Dunn & Crutcher.
Citing Judge Brett Kavanaugh’s dissenting opinion, Olson says the majority opinion, written by Brown and joined by Judge David Tatel, “calls to mind the bad old days when mergers were viewed with suspicion regardless of their economic benefits.”
Denis criticized the circuit court’s opinion for failing to define the relevant market and for placing an unusual emphasis on the Whole Foods’ core customers, who would presumably continue to frequent the premium natural and organic food stores even if their prices rose, instead of their marginal customers, who would seek out alternatives if Whole Foods increased its prices.
Brown’s opinion reversed the district court’s ruling on the grounds that the trial court underestimated the FTC’s likelihood of success on the merits and did not take enough time to determine whether the merger violated antitrust law.
Though Brown wrote that the panel was issuing its ruling reluctantly because at the time the two companies were well on the way to becoming fully integrated, she said the “district court committed legal error in assuming market definition must depend on marginal customers.”
Olson also takes issue with the opinion’s focus on core customers, saying the panel “simply invented” that argument and should have placed more weight in economic analysis.
Olson says under the July ruling, the FTC has “unbridled authority to block a merger” without showing that it would have an adverse effect on competition.
The FTC's response, written by Imad Abyad, says Whole Foods failed to identify an issue of law on which the panel made an incorrect decision.
"It is little wonder that Whole Foods can point to no solid basis that it could overcome the presumption of anticompetitive harm likely to ensue from its dominance of a properly-defined market," Abyad says in his response.
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