Whole Foods Market Inc.’s acquisition of Boulder-based Wild Oats Markets is up in the air again after an appeals court ruled Tuesday that a lower court didn’t fully consider the impact of the deal.
The appeals court remanded the case for reconsideration to U.S. District Judge Paul Friedman, saying he too quickly and errantly dismissed Federal Trade Commission claims that Whole Foods’ purchase of rival Wild Oats violated antitrust law.
Whole Foods closed on its $565 million purchase of Wild Oats shortly after Friedman denied the FTC’s preliminary injunction to block the merger last August because of concerns it would limit competition in the organic retail sector.
Whole Foods has already closed some Wild Oats locations and converted others to the Whole Foods nameplate.
The ruling does not require the dissolution of the deal, nor does it deem the acquisition unlawful, but observers wonder where this could go for the Austin-based natural-foods grocer.
“The mind boggles at what it could take to disentangle those two companies,” said Kevin Coupe, founder and editor of , a Connecticut-based website for food retail and manufacturing sectors said. “This is more complicated than breaking up a marriage.”
Debbie Feinstein, a partner at Arnold & Porter in Washington, D.C., who specializes in antitrust, said now that the case is back in district court, the judge can either decline again, or it could take several courses of action pending the FTC’s administrative proceedings, which had been stayed but could be reactivated at any time. One such interim remedy is asset maintenance, where Whole Foods could be ordered not to close or rename any more Wild Oats stores to preserve the status quo.
The FTC proceedings, which can last at least six months, could end in the FTC ordering Whole Foods to divest of the Wild Oats stores it acquired to be run independently, she said.
“Nobody quite knows what the process is going to be; this is really pretty unusual,” Feinstein said. “In a case like this, where there are identifiable assets that could be divested, there have been post-closing proceedings.”
Whole Foods said in a statement it is evaluating seeking a review by the entire Court of Appeals, but “meanwhile, it is business as usual.”
Burt Flickinger III, managing director of consumer industry retail firm Strategic Resource Group, called the ruling shocking given the lower prices he expected the merger to generate.
Alex McCarthy: 303-954-1381 or amccarthy@denverpost.com
