Federal Trade Commission v. Whole Foods Market, Inc.

Facts

Whole Foods Market, Inc. and Wild Oats Markets, Inc. operated 194 and 110 grocery stores respectively, primarily in the United States, focusing on natural and organic products. In February 2007, they announced that Whole Foods would acquire Wild Oats in a $565 million transaction. The FTC investigated and sought a preliminary injunction to block the merger, arguing that Whole Foods and Wild Oats were the two largest operators of “premium natural and organic supermarkets” (PNOS), and in eighteen cities, the merger would create monopolies. The FTC presented evidence including emails from Whole Foods CEO John Mackey suggesting the purpose of the merger was to eliminate a competitor, expert economic analysis showing how entry by various supermarkets affected sales, and evidence of price effects when PNOS competitors entered markets. Whole Foods countered that it competed within the broader market of all supermarkets, not just PNOS, and presented expert testimony that a hypothetical monopolist could not raise prices without driving customers to other supermarkets. The district court denied the preliminary injunction, finding that PNOS was not a distinct market. While the appeal was pending, Whole Foods completed the acquisition of Wild Oats and began integrating the companies.