Dallas – The chief executive of Whole Foods Market Inc. told his board that if it bought its leading rival, the company would “eliminate forever” the possibility that anyone else could create a nationwide competitor in the natural and organic grocery business, government lawyers say.
Chief executive John Mackey also said that buying Boulder-based Wild Oats Markets Inc. would let Whole Foods “avoid nasty price wars” in several cities where the two compete, the lawyers wrote in a court document unsealed on Tuesday.
Federal Trade Commission lawyers reported the comments in a request this month for a temporary injunction to block Whole Foods from buying Wild Oats. A federal judge approved the request.
Whole Foods spokeswoman Kate Lowery said the FTC took comments “absolutely out of context” and quoted “mere preliminary documents used for discussion.” Whole Foods announced in February that it had agreed to buy smaller rival Wild Oats Markets for $18.50 per share, or about $565 million. This month, the FTC filed a lawsuit in federal district court in Washington and won a temporary restraining order to block the deal.
Whole Foods was forced Monday to extend its tender offer for Wild Oats through July 20, and another delay could be coming because a hearing in the lawsuit has been scheduled for July 31.
The dispute centers on defining Whole Foods’ competition. Regulators say Whole Foods and Wild Oats are leading players in natural and organic food, but Whole Foods argues that the companies are a small part of a much larger industry because big grocery chains also sell organic food.
Government officials had charged that combining the two chains could lead to higher prices, but the unsealed filing by the FTC added new details.
The FTC lawyers said Mackey “bluntly” told his company directors why he wanted to acquire Wild Oats. It “is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space,” the FTC quoted Mackey as saying.
“Eliminating them means eliminating this threat forever, or almost forever.”
