Whole Foods sues FTC over agency's role in Wild Oats deal

PORTLAND, Ore. - Natural grocer Whole Foods filed a federal lawsuit yesterday against the Federal Trade Commission, claiming the regulator violated its due process rights in a dispute over its acquisition of rival Wild Oats.

Whole Foods Market Inc. bought Wild Oats Markets Inc. of Boulder, Colo., in 2007 for $565 million. But since then, the deal has been embroiled in an antitrust challenge that has Whole Foods' biggest acquisition in legal limbo.

The FTC thought the deal could create a natural food monopoly, but federal judges determined the acquisition could move forward. More than a year later, an appeals court decision threw it all back into question.

The commission is conducting administrative proceedings in the case that are scheduled to go to trial in February. The proceedings are intended to be an impartial inquiry into whether a deal violates antitrust laws.

But Austin, Texas-based Whole Foods said in a lawsuit filed in US District Court for the District of Columbia yesterday that the FTC is hopelessly biased, has already prejudged the outcome of the case, and can't be expected to oversee an impartial administrative proceeding.

The lawsuit argues that the commission also violated the company's due process rights by setting a rapid schedule for the trial that won't allow Whole Foods adequate time to prepare its defense.

Whole Foods wants the court to require the FTC to terminate its administrative trial. Instead, the company wants the case to be resolved finally in federal court.

Representatives from the FTC were not immediately available to comment.