Dallas – In a lawsuit deposition, the chief executive of Whole Foods Market Inc. made an unapologetic defense of his company’s strategy of buying its rival to eliminate a competitor.
John Mackey said federal regulators could let Whole Foods buy Boulder-based rival Wild Oats and remove a failing company, or they could try to block the deal so that a big national grocer could buy Wild Oats.
“We want to eliminate a competitor,” Mackey said in the deposition released Thursday. “It will in the short run help Whole Foods.”
The elimination of Wild Oats “will lessen competition in the short run,” Mackey said. “But it doesn’t prevent competition from occurring in this market or in the food-retailing market.”
Mackey said Wild Oats shareholders would be better off taking his company’s $18.50-per- share offer, about $565 million, rather than a much lower price that Safeway Co. or Kroger Co. might pay “after Whole Foods has continued to batter them around over the next few years.”
Whole Foods would close many of the Wild Oats locations, which regulators believe would raise prices for consumers.
But Mackey said if Whole Foods can’t close the stores, “then Wild Oats, frankly, isn’t worth buying.”
Mackey made the comments in an April 27 deposition that the Federal Trade Commission posted on its website.
The FTC has sued Whole Foods to block it from buying Wild Oats. A hearing is scheduled July 31 in federal district court in Washington.
Many of the documents released Thursday were heavily edited or had been previously reported.
Among them: comments that Mackey posted anonymously on financial websites boasting about Whole Foods and ripping Wild Oats.
The Securities and Exchange Commission is investigating the online comments, and Mackey issued a statement Tuesday apologizing for the posts.
In a report to the Whole Foods board of directors, Mackey boasted that the company’s shares had gone up after it announced the agreement to buy No. 2 organic- and natural-food retailer Wild Oats in February.
But he complained about the perception that Whole Foods charges high prices.
Mackey said it “will likely take several years before the media comes to really believe we are truly competitive about price because the ‘Whole Paycheck’ nickname is now fairly deeply rooted.”
