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Federal Trade Commission v. Whole Foods Market, Inc.

United States Court of Appeals for the District of Columbia
548 F.3d 1028 (2008)


Whole Foods Market, Inc. (Whole Foods) and Wild Oats Markets, Inc. (Wild Oats) (defendants) were grocery-store chains. Whole Foods and Wild Oats specialized as premium, natural, and organic supermarkets. Whole Foods and Wild Oats were the two largest premium-supermarket chains in the United States. These premium supermarkets stressed environmental values and the importance of a healthy lifestyle. For Whole Foods, 68 percent of the company’s customers shared those values. In 2007, Whole Foods announced it would acquire Wild Oats. The Federal Trade Commission (FTC) (plaintiff) sued to block the merger under § 7 of the Clayton Act. The FTC argued that Whole Foods and Wild Oats competed with each other in the premium-supermarket submarket. Whole Foods argued the relevant product market included all supermarkets, including conventional supermarkets that did not specialize in organic and natural products. The FTC’s expert focused on the whether Wild Oats customers would switch to a conventional supermarket or another premium supermarket if Wild Oats closed. The FTC’s expert said that most customers of Wild Oats would switch to Whole Foods rather than a conventional supermarket. The FTC also presented evidence that Whole Foods charged customers higher prices in locations that did not have a Wild Oats nearby. Similarly, when a new premium supermarket opened in a certain area, prices at other premium supermarkets dropped. By contrast, the opening of a new conventional supermarket did not influence premium-supermarket prices. The district court nonetheless held that the FTC had not demonstrated that the relevant submarket was premium supermarkets. The district court denied the FTC’s motion for a preliminary injunction. The FTC appealed.

Rule of Law


Holding and Reasoning (Brown, J.)

Concurrence (Tatel, J.)

Dissent (Kavanaugh, J.)

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