Documents Describe Whole Foods’ Strategy
By THE ASSOCIATED PRESS
Published: August 15, 2007
WASHINGTON, Aug. 14 (AP) — Federal regulators filed court documents on Tuesday outlining concerns that stores in competitive markets will close and consumers will face higher prices if Whole Foods Market’s $565 million purchase of Wild Oats Markets is completed.
The Federal Trade Commission documents revealed that Whole Foods planned to close 30 or more Wild Oats stores, a move that the company believes would nearly double revenue for some Whole Foods stores.
The agency also revealed how Whole Foods negotiates with suppliers to drive up costs for Wal-Mart Stores. Regulators also discussed the company’s closely held marketing strategies.
Regulators are trying to block the deal on antitrust grounds, arguing that it would mean higher prices for organic and natural food. A judge is considering whether to block the deal temporarily.
Many of the details in the documents, which F.T.C. lawyers filed electronically, were not meant to be released publicly, but words intended to be inaccessible were actually just electronically shaded black. The words could be searched, copied, pasted and read in versions downloaded from court computer servers.
Court officials realized the mistake and replaced the filing with a version using scanned pages of the edited documents. The Associated Press downloaded the document from the public server before it was replaced by an edited version.
In a statement, Whole Foods, based in Austin, Tex., said late Tuesday that it was investigating the “apparent improper release by the Federal Trade Commission of confidential proprietary business information.”
An agency spokesman, Mitchell Katz, declined to comment on the matter.
Among the details cited in the government filing were:
¶The opening of a Whole Foods store can cut revenue 30 percent in nearby Wild Oats stores.
¶Whole Foods set “ground rules” barring suppliers from selling directly to Wal-Mart.
¶ Documents labeled “Project Goldmine” predicted that buying Wild Oats and shutting certain stores would increase revenue 85 percent to 90 percent at nearby Whole Foods stores.
¶The takeover will send as many as 80 percent to 90 percent of Wild Oats shoppers to Whole Foods stores, according to Whole Foods documents cited by the government. “They will unambiguously be worse off,” because of higher prices, the F.T.C. said.
Kate Lowery, a spokeswoman for Whole Foods, said the company had “no idea how many stores” would be closed if the purchase went through.
http://www.nytimes.com/2007/08/15/business/15food.html
