A federal court today has tentatively approved the proposed acquisition of Wild Oats Markets by Whole Foods Market Inc. The Federal Trade Commission is seeking to block the transaction and has indicated that it will appeal the decision. U.S. District Judge Paul L. Friedman's decision is sealed.
The FTC has argued that Wild Oats and Whole Foods are head-to-head rivals in a narrow high-end natural and organic food market insulated from competition coming from the general supermarkets and grocery stores. Wild Oats challenged the government's market analysis, arguing that much larger chains compete in sales of the same products and have increasingly copied the marketing strategies of the combining companies. Both companies are small in the context of the broader retail grocery industry, with Whole Foods operating around 200 stores and Wild Oats with just over 100. (By way of comparison, Kroger operates nearly 2500 stores.) The entire case, therefore, turns on the proper definition of the relevant market, and the Court has sided with the merging parties in rejecting the government's proposed narrow definition. The proposed transaction has been closely watched both within the industry and by the broader business and legal community.
HRO has represented Wild Oats in the past, but it is not involved with the contemplated merger or related proceedings, and this alert is based solely upon information available to the public.