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WASHINGTON, D.C. -- Yesterday saw the opening salvos of a courtroom battle between Whole Foods and the Federal Trade Commission, as the latter of which seeks to block the former's merger with Wild Oats.
In day one of preliminary hearings in the U.S. District Court for the District of Columbia, two antitrust experts delivering opposing testimony on whether a combine Whole Foods anfd Wild Oats would illegally stifle competition in the naturalorgnics retail market.
The Wall Street Journal reported that during questioning from government attorneys, David Scheffman, antitrust consultant and former FTC official, argued in favor the the merger, telling the court that the natural food stores don't just compete with each other, as argued by the FTC, but are also up against big players in the broader supermarket industry.
"They are supermarkets. They are one-stop shopping," Mr. Scheffman was quoted as saying. He contended that market research shows shoppers at Whole Foods also shop grocers ranging from Trader Joe's Co. to Safeway Inc.
On the other side of the argument, University of Chicago antitrust expert Kevin Murphy was questioned by attorneys for the retailers. Murphy, in oral testimony, said he found margin and pricing evidence indicating competition between the two companies can lead to lower prices in specific geographic areas, reported the Wall Street Journal.
Murphy cited a "substantial decline in margins" and a 2 percent drop in prices at Wild Oats stores in Boulder when Whole Foods entered that market. Testimony regarding Boulder was challenged by the retailers' attorneys and may not be considered by the court because it wasn't part of Mr. Murphy's submitted testimony, the Wall Street Journal said.
Written statements from both experts remained under seal, despite public questioning about the underlying testimony. Wild Oats and Whole Foods have argued to keep some court materials from public view, arguing data and information contained in the documents touch on numerous trade secrets.
The hearings are scheduled to conclude today.