(CN) – The Federal Trade Commission lauded the D.C. Circuit’s ruling to let stand a decision that cleared the path to reverse Whole Foods’ 2007 acquisition of rival organic grocer Wild Oats for $565 million. The FTC claims the merger monopolized the market for premium organic supermarkets.
“We are quite pleased with the ruling on Friday by the appeals court reaffirming its decision to vacate the district court’s denial of the Commission’s application for an injunction against the acquisition of Wild Oats by Whole Foods,” said David Wales, acting director of the FTC’s Bureau of Competition, in a statement.
The district court had denied the preliminary injunction on the grounds that “premium natural and organic supermarkets” (PNOS) weren’t a distinct market, and that Whole Foods and Wild Oats compete within a broader market of grocery stores and supermarkets. The companies merged on Aug. 28, after a three-judge panel denied the government’s request for an injunction.
But in July 2008, the court did an about-face and reversed the lower court’s denial of the injunction.
Judge Brown rejected the organic grocer’s claim that the issue is moot because the merger has already occurred. “Only in a rare case would we agree a transaction is truly irreversible,” Brown wrote.
Turning to the FTC’s evidence, the court concluded that Whole Foods’ core health-conscious customers do, in fact, constitute a distinct market under antitrust law.
“The FTC put forward economic evidence – which the district court ignored – showing directly how PNOS discriminate on price between their core and marginal customers, thus treating the former as a distinct market,” the July ruling states.
Judge Kavanaugh dissented, saying the “court’s splintered decision in this case seeks to unring the bell.”
“In my judgment, the court got it right a year ago in refusing to enjoin the merger,” Kavanaugh added, “and there is no basis for a changed result now.”
On Friday, the court turned down Whole Foods’ petition for a full-court review, allowing the government to press forward with its antitrust claims.
Wales said the FTC “look(s) forward to presenting (its) evidence as to why this merger is unlawful and should be undone at the plenary trial in a few months.”