Whole Foods Settles Antitrust Suit

Highlights include Whole Foods Market, Inc. (WFMI - Snapshot Report), The Kroger Co. (KR - Analyst Report), Safeway Inc. (SWY - Analyst Report), SuperValu Inc. (SVU - Snapshot Report) and Wal-Mart Stores, Inc. (WMT - Snapshot Report).

This morning, Whole Foods Market, Inc. (WFMI - Snapshot Report) announced that it has reached a settlement agreement resolving the Federal Trade Commission's (FTC) antitrust challenge to the company's August 2007 acquisition of Wild Oats Markets, Inc. The FTC will issue a final ruling after a 30-day comment period.

A 3rd-party divestiture trustee has been appointed to market the following for sale: leases and related assets for 19 non-operating former Wild Oats stores; leases and related fixed assets for 12 operating acquired Wild Oats stores and one operating Whole Foods Market store; and Wild Oats trademarks and other intellectual property associated with the Wild Oats stores.

The company expects to record a non-cash charge of approximately $19 million or less relating to the potential sale of the 13 operating stores, which had combined sales of $31 million in the first quarter.

This antitrust case against Whole Foods made little sense from the start. The FTC had concerns about Whole Foods' market power in the organic foods market, but those concerns missed the bigger industry picture.

Whole Foods generates about $8 billion in annual sales. Kroger (KR - Analyst Report), Safeway (SWY - Analyst Report), SuperValu (SVU - Snapshot Report) and Wal-Mart (WMT - Snapshot Report) combine for over $300 billion in annual sales. If these 4 traditional grocery stores allocated just a small part of their stores to organic foods, their combined sales could easily surpass Whole Foods' total sales.

In any event, with the antitrust investigation finally behind it, Whole Foods can return its focus to charging premium prices to a consumer that continues to search for the lowest price and the most value.