FTC Resists Whole Foods Deal for Wild Oats

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The Federal Trade Commission may block the Whole Foods chain from buying rival Wild Oats, saying the deal would stifle competition. Whole Foods insists many shopping choices exist for consumers in the organic marketplace.

STEVE INSKEEP, host:

Some other news. The Federal Trade Commission is trying to block organic supermarket chain Whole Foods from buying its closest rival. The government says a merger would reduce competition and cost customers more. Whole Foods says that's nonsense, and today a critical hearing in the case will try to sort this out in Washington, D.C.

NPR's Frank Langfitt reports.

FRANK LANGFITT: Whole Foods is known for high quality and high prices. In fact, some shoppers call it Whole Paycheck. The Federal Trade Commission says if the company buys organic grocer Wild Oats, prices will go up even more. Steven Calkins is a former general counsel with the commission. He says some of the strongest evidence against the merger comes from e-mails by John Mackey, Whole Foods CEO.

Mr. STEVEN CALKINS(ph) (Former General Counsel, Federal Trade Commission): He said that the purpose of the transaction was to end some price wars.

LANGFITT: But the government usually has a tough time winning these cases, and Calkins says Whole Foods will argue that competition is only growing.

Mr. CALKINS: They point to the way that mainstream grocery stores - Safeway and Kroger - are bringing out more organic foods. They point to Trader Joe's and its success and try to paint a picture of a very changing marketplace.

LANGFITT: The case has already embarrassed Mackey, the Whole Foods CEO. Last month the commission revealed he'd been trashing Wild Oats in anonymous postings on the Internet. But Calkins says the case will hinge on hard data. Can the government prove that when a Wild Oats opens near a Whole Foods, it sparks a price war?

Frank Langfitt, NPR News, Washington.

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