Whole Foods Market Inc. announced a settlement with the Federal Trade Commission on Friday that ended the government's efforts to unwind the grocer's 2007 acquisition of Wild Oats Markets Inc.
The FTC said the combination of the two natural and organic food retailers threatened competition and violated antitrust regulations.
The settlement calls for the appointment of a trustee who will sell the leases for 19 closed Wild Oats stores, including 10 that were shut by Wild Oats before the merger and nine closed by Whole Foods. The trustee will also divest 13 open stores, including 12 that were once Wild Oats markets and one Whole Foods store.
Most of the sites are in Arizona, Colorado, Nevada and Oregon. None are in California.
Both sides can portray the settlement as a victory, said Rebecca Nelson, an antitrust attorney at the Bryan Cave law firm in St. Louis.
"The FTC can claim victory by giving consumers the Wild Oats brand and requiring that stores that had been closed will potentially be reopened by a new owner," Nelson said.
The FTC can also claim that the settlement sets a precedent for future cases by allowing it to say that even narrow markets, such as natural and organic grocery stores in a sea of traditional supermarkets, represent an area where antitrust issues apply.
But the settlement allows Whole Foods to keep "a majority of the stores it gained in the acquisition, which gives it many of the benefits it sought -- a broader footprint and improved economies of scale, for example," Nelson said.
Austin, Texas-based Whole Foods purchased the 110-store Wild Oats chain for $565 million.
The settlement will leave Whole Foods with more than 260 stores in the U.S., Canada and Britain that have combined sales of about $8 billion.
"We are pleased to have reached a mutually satisfactory agreement with the FTC," Whole Foods Chief Executive John Mackey said. "We believe it was in the best interests of all our stakeholders to resolve this matter so we can dedicate our full attention to selling the highest quality foods available."
The 13 open stores that are for sale will conduct "business as usual," Mackey said. Employees of the stores that are sold will have a choice of either a guaranteed job offer in another store or an enhanced severance package, he said.
