Court weighs FTC's request to halt Whole Foods deal

The Federal Trade Commission tried to block Whole Foods' acquisition of Boulder, Colo.-based Wild Oats last year, arguing that it would stifle competition and harm consumers. But a federal district court judge rejected the agency's request in August and the two stores closed the deal later that month.

The FTC's appeal of that ruling is unusual because antitrust regulators usually throw in the towel after the courts clear a transaction, since acquisitions can be difficult to unwind.

Judge David Tatel of the U.S. Court of Appeals for the D.C. Circuit expressed some sympathy for the FTC's arguments that the district court had applied an incorrect legal standard when it greenlighted the deal, and failed to consider all the evidence presented by the agency.

Several studies presented by the FTC "just aren't mentioned in the district court's opinion," Tatel said.

But Judge Brett Kavanaugh appeared to accept that the district court applied the proper legal standard.

When Marilyn Kerst, the FTC's lawyer, told the panel that the district court had imposed a higher burden of proof on the agency than required, Kavanaugh responded, "That's not a fair characterization."

Judge Janice Rogers Brown asked few questions.

None of the judges addressed the issue of how the now-combined company could be broken up or what other steps would be in order, such as the sale of some Wild Oats stores, if the district court's ruling is overturned.

Instead, most of the hearing consisted of rehashing arguments about the transaction itself. The government contends that Austin, Texas-based Whole Foods and Wild Oats competed in a distinct market of "premium natural and organic supermarkets" and would be able to raise prices after combining their operations.