The Organization for Competitive Markets is pleased with yesterday’s decision by an appellate court to temporarily block Whole Foods Markets’ acquisition of Wild Oats Markets.  The order comes from U.S. Court of Appeals for the District of Columbia.

A lower court, last Thursday, refused to grant a Federal Trade Commission (FTC) request to block the merger pending a trial.  The companies are number one and two in the natural foods supermarket industry.  The decision today arose from an expedited appeal filed by the FTC. 

The Court of Appeals Order, which is not a ruling on the merits, said:

“that Whole Foods Market, Inc. be enjoined from taking any further steps to acquire the stock, assets, or any other interest in Wild Oats Markets, Inc., directly or indirectly, pending further order of the court.  The purpose of this administrative injunction is to give the court sufficient opportunity to consider the merits of the motion for an injunction and should not be construed in any way as a ruling on the merits.”

OCM has supported FTC in its efforts, believing that further consolidation in the natural foods supermarket sector will reduce prices for farmers, raise consumer prices, and depress choice and innovation in this sector.  Whole Foods internal documents provided, in OCM’s view, proof that the intent of the merger was to close Wild Oats stores, increase market power, and reap monopoly profits.  OCM believes there are few, if any, pro-competitive benefits.

The lower court’s 93 page ruling last Thursday has not been made public, but OCM and other commentators believe the decision hinged on the court’s determination that the relevant market is the entire supermarket sector, not the natural foods sector.  Concentration in the national supermarket industry will not be significantly increased by the merger under the lower court’s view.