FTC: Merger would hurt natural foods niche

Washington -- Whole Foods Market Inc.'s board was told buying Wild Oats Markets Inc. would help avoid price wars, a U.S. regulator said in a lawsuit to block the deal.

In addition, according to Federal Trade Commission documents, Whole Foods directors were told a takeover would eliminate "another player" in the market, The Wall Street Journal reported Tuesday.

Wild Oats of Boulder, Colo., "may not be able to defeat us, but they can still hurt us," John Mackey, the Austin, Texas-headquartered Whole Foods chief executive officer told directors, according to the FTC documents. 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."

A Whole Foods-Wild Oats merger would reduce competition and raise prices for consumers, the FTC said in its lawsuit, maintaining the natural foods market is distinct from the general grocery market.

If the $565 million deal is realized, according to the FTC's 16-page lawsuit, Whole Foods would close "numerous" Wild Oats stores, sell others and operate the remainder as Whole Foods outlets.

"(Benefits to the consumer) will be lost if the acquisition occurs ...," the agency said.

Copyright 2007 by United Press International.