PORTLAND, Ore. – Whole Foods CEO John Mackey said Tuesday that the Federal Trade Commission’s pursuit of antitrust claims in his company’s acquisition of Wild Oats is “almost a vendetta” and is wasting time and money.
Whole Foods Market Inc. filed a lawsuit late Monday against the regulator, claiming it has violated Whole Foods’ due process rights in continuing proceedings about the deal.
The FTC would not comment on the case Tuesday but maintains the deal could hurt consumers and said it is treating this like any other case.
“We protect consumers, and if we feel a merger is going to hurt consumers and will be anticompetitive, we will pursue it aggressively and that is the case with Whole Foods,” said David Wales, acting director of the bureau of competition at the FTC.
The debate over the deal is garnering attention because the commission is seeking to unwind two companies that have already merged and because Whole Foods is calling into question the larger system that handles antitrust cases.
Austin, Texas-based Whole Foods wants the court to terminate an administrative trial the FTC has begun, in which the agency is examining the grocer’s $565 million purchase of rival Wild Oats Markets Inc. of Boulder, Colo.
The FTC sought to temporarily block the acquisition in U.S. District Court for the District of Columbia last year, arguing that it would limit competition and could lead to higher prices. The court ruled against the FTC, and the two companies closed the deal in August 2007.
But an appeals court ruled in favor of the FTC in July 2008 and sent the case back to the lower court for reconsideration.
Meanwhile, the FTC began its administrative proceeding, which is intended to be an impartial inquiry into whether a deal violates antitrust laws.
Whole Foods argued in Monday’s lawsuit — filed in the same district court – that the FTC has prejudged the case and can’t be expected to oversee an impartial proceeding. It also argued the agency has violated the company’s due process rights by setting a rapid schedule for the administrative trial that won’t allow the company adequate time to prepare its defense.
The company wants the court to require the FTC to terminate its administrative trial and have the issue decided in federal court.
While antitrust experts say it’s unusual for a company to sue a regulatory body in the midst of proceedings, FTC says it is acting as usual.
Wales said the FTC stands by its antitrust claims and says the system will determine the best result.
Wales said the FTC’s system of review has been in place for nearly 100 years. And other business deals that were already complete have been undone. In the case of Chicago Bridge & Iron Co.’s purchase of Pitt-Des Moines Inc. in 2001, the FTC issued an order to split the business seven years after the two companies finished merging.
But Whole Foods says its experience highlights inherent flaws in the system.
“The whole thing is ridiculous,” said Mackey, who stepped out of his recently low profile to speak at a press conference in Washington Tuesday. “We cannot get a fair trial in their court system.”
Mergers, acquisitions and antitrust issues fall under the oversight of either the FTC or the Justice Department depending on various criteria. But each body follows slightly different processes.
The key difference is that the Justice Department simply asks for a permanent injunction, a one-step effort to stop the deal, in the cases where it determines laws or rules have been violated. The FTC can seek a preliminary injunction, then an administrative proceeding that can be appealed to a circuit court if necessary, a process Whole Foods’ attorneys and company leaders argue is unfair.
Whole Foods representatives are meeting Tuesday with members of Congress and their staffs to consider legislative changes that would end some of the disparity between the two regulating bodies.
AP Business Reporter Christopher S. Rugaber in Washington, D.C., contributed to this report.