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WASHINGTON -- Competition from conventional supermarkets would prevent Whole Foods Market, Inc. from making significant price hikes if it were to acquire Wild Oats Markets, Inc., concluded the federal judge who last week denied the Federal Trade Commission's attempt to block the transaction.
Judge Paul L. Friedman released the details yesterday of his decision last week to deny the federal government's request to stop the deal.
The Federal Trade Commission on Friday won an appeal of Friedman's decision, and asked for a stay that would delay the takeover pending the appeal's outcome. On Monday, the appeals court asked the agency and the companies to provide additional information on the request this week.
In his 93-page opinion, released to the public yesterday, Judge Friedman denied the FTC's argument that Whole Foods and Wild Oats are close competitors that restrain each other's pricing power in a way that other supermarkets do not.
Friedman acknowledged that conventional supermarket chains such as Safeway and Kroger are selling more organic produce, and redesigning many of their stores to compete more directly with Whole Foods. About 60 percent of natural and organic food products sold comes from conventional stores, he noted.
If Whole Foods were to jack up prices or cut service at stores after acquiring Wild Oats, Friedman wrote, "many customers could and would readily shift more of their purchases to any of these alternative sources of natural and organic foods, often stores where they already shop."