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    Court Reverses Whole Foods, Wild Oats Ruling

    A three-judge panel of the Court of Appeals ruled that a lower court erred in denying a request by federal regulators for a preliminary injunction to halt the merger of the supernaturals.

    A federal appeals court yesterday overturned the lower court ruling from last year that allowed Whole Foods Market Inc. to acquire Wild Oats Markets, Inc. The ruling sends the case back to the U.S. District Court for the District of Columbia. It's not immediately clear what impact the ruling might have on the combined companies, which merged last year.

    A three-judge panel of the Court of Appeals made the ruling for the D.C. Circuit, saying the lower court erred when it denied a request by federal regulators last August for a preliminary injunction to stop the transaction that closed later that month. The 2-1 ruling by the Washington-based U.S. Circuit Court of Appeals said the trial judge handling the case made mistakes when expediting review of the agency's challenge. The ruling breathes life into legal proceedings over the merger. It may also open the door to the Federal Trade Commission in its previous goal to force Whole Foods to sell some operations to meet competitive concerns raised by the merger.

    Whole Foods operated 194 stores prior to the Wild Oats deal, when the company purchased the 110-store chain for $565 million. The two companies merged after a federal trial court rejected the FTC's challenge. An attorney for Whole Foods said in April that the company had already sold 35 Wild Oats stores and closed an additional dozen. Another third of the remaining Wild Oats stores have undergone conversion to the Whole Foods format. The FTC argued earlier this year that the integration of the two companies would take several years to complete.

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