Whole Foods Market, Inc.; Analysis of Agreement Containing Consent Orders to Aid Public Comment, 10913-10916 [E9-5519]
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Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Notices
1843) (BHC Act) and Regulation Y (12
CFR Part 225) to engage de novo, or to
acquire or control voting securities or
assets of a company, including the
companies listed below, that engages
either directly or through a subsidiary or
other company, in a nonbanking activity
that is listed in § 225.28 of Regulation Y
(12 CFR 225.28) or that the Board has
determined by Order to be closely
related to banking and permissible for
bank holding companies. Unless
otherwise noted, these activities will be
conducted throughout the United States.
Each notice is available for inspection
at the Federal Reserve Bank indicated.
The notice also will be available for
inspection at the offices of the Board of
Governors. Interested persons may
express their views in writing on the
question whether the proposal complies
with the standards of section 4 of the
BHC Act. Additional information on all
bank holding companies may be
obtained from the National Information
Center website at www.ffiec.gov/nic/.
Unless otherwise noted, comments
regarding the applications must be
received at the Reserve Bank indicated
or the offices of the Board of Governors
not later than March 30, 2009.
A. Federal Reserve Bank of San
Francisco (Kenneth Binning, Vice
President, Applications and
Enforcement) 101 Market Street, San
Francisco, California 94105–1579:
1. NHB Holdings, Inc., and Proficio
Mortgage Ventures, LLC, both of
Jacksonville, Florida, to engage de novo
in a joint venture with SilverLeaf
Mortgage, LLC, Salt Lake City, Utah, in
conducting mortgage banking activities,
pursuant to section 225.28(b)(1) of
Regulation Y.
Board of Governors of the Federal Reserve
System, March 10, 2009.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc.E9–5454 Filed 3–12–09; 8:45 am]
BILLING CODE 6210–01–S
FEDERAL RESERVE SYSTEM
sroberts on PROD1PC70 with NOTICES
Formations of, Acquisitions by, and
Mergers of Bank Holding Companies
17:55 Mar 12, 2009
Jkt 217001
Board of Governors of the Federal Reserve
System, March 10, 2009.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc.E9–5455 Filed 3–12–09; 8:45 am]
BILLING CODE 6210–01–S
The companies listed in this notice
have applied to the Board for approval,
pursuant to the Bank Holding Company
Act of 1956 (12 U.S.C. 1841 et seq.)
(BHC Act), Regulation Y (12 CFR Part
225), and all other applicable statutes
and regulations to become a bank
holding company and/or to acquire the
assets or the ownership of, control of, or
the power to vote shares of a bank or
bank holding company and all of the
banks and nonbanking companies
VerDate Nov<24>2008
owned by the bank holding company,
including the companies listed below.
The applications listed below, as well
as other related filings required by the
Board, are available for immediate
inspection at the Federal Reserve Bank
indicated. The applications also will be
available for inspection at the offices of
the Board of Governors. Interested
persons may express their views in
writing on the standards enumerated in
the BHC Act (12 U.S.C. 1842(c)). If the
proposal also involves the acquisition of
a nonbanking company, the review also
includes whether the acquisition of the
nonbanking company complies with the
standards in section 4 of the BHC Act
(12 U.S.C. 1843). Unless otherwise
noted, nonbanking activities will be
conducted throughout the United States.
Additional information on all bank
holding companies may be obtained
from the National Information Center
website at www.ffiec.gov/nic/.
Unless otherwise noted, comments
regarding each of these applications
must be received at the Reserve Bank
indicated or the offices of the Board of
Governors not later than April 9. 2009.
A. Federal Reserve Bank of
Philadelphia (Michael E. Collins, Senior
Vice President) 100 North 6th Street,
Philadelphia, Pennsylvania 19105–
1521:
1. Pennsylvania Commerce Bancorp,
Inc., Harrisburg, Pennsylvania, to merge
with Republic First Bancorp, Inc., and
thereby indirectly acquire Republic First
Bank, both of Philadelphia,
Pennsylvania.
B. Federal Reserve Bank of St. Louis
(Glenda Wilson, Community Affairs
Officer) P.O. Box 442, St. Louis,
Missouri 63166–2034:
1. Scott Morgan Bancorp, Inc., Bluffs,
Illinois, to become a bank holding
company by acquiring 100 percent of
the voting shares of Bank of Bluffs,
Bluffs, Illinois.
FEDERAL TRADE COMMISSION
[Docket No. 9324]
Whole Foods Market, Inc.; Analysis of
Agreement Containing Consent Orders
to Aid Public Comment
Federal Trade Commission.
Proposed Consent Agreement.
AGENCY:
ACTION:
SUMMARY: The consent agreement in this
matter settles alleged violations of
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10913
federal law prohibiting unfair or
deceptive acts or practices or unfair
methods of competition. The attached
Analysis to Aid Public Comment
describes both the allegations in the
complaint and the terms of the consent
order—embodied in the consent
agreement—that would settle these
allegations.
DATES: Comments must be received on
or before April 6, 2009.
ADDRESSES: Interested parties are
invited to submit written comments
electronically or in paper form.
Comments should refer to‘‘Whole Foods
Market, Docket No. 9324’’ to facilitate
the organization of comments. Please
note that your comment—including
your name and your state—will be
placed on the public record of this
proceeding, including on the publicly
accessible FTC website, at (https://
www.ftc.gov/os/publiccomments.shtm).
Because comments will be made
public, they should not include any
sensitive personal information, such as
an individual’s Social Security Number;
date of birth; driver’s license number or
other state identification number, or
foreign country equivalent; passport
number; financial account number; or
credit or debit card number. Comments
also should not include any sensitive
health information, such as medical
records or other individually
identifiable health information. In
addition, comments should not include
any ‘‘[t]rade secret or any commercial or
financial information which is obtained
from any person and which is privileged
or confidential. . . .,’’ as provided in
Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and Commission Rule 4.10(a)(2),
16 CFR 4.10(a)(2). Comments containing
material for which confidential
treatment is requested must be filed in
paper form, must be clearly labeled
‘‘Confidential,’’ and must comply with
FTC Rule 4.9(c).1
Because paper mail addressed to the
FTC is subject to delay due to
heightened security screening, please
consider submitting your comments in
electronic form. Comments filed in
electronic form should be submitted by
using the following weblink: (https://
secure.commentworks.com/ftcWholeFoodsMarket) (and following the
instructions on the web-based form). To
ensure that the Commission considers
1 FTC Rule 4.2(d), 16 CFR 4.2(d). The comment
must be accompanied by an explicit request for
confidential treatment, including the factual and
legal basis for the request, and must identify the
specific portions of the comment to be withheld
from the public record. The request will be granted
or denied by the Commission’s General Counsel,
consistent with applicable law and the public
interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
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Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Notices
an electronic comment, you must file it
on the web-based form at the
weblink:(https://
secure.commentworks.com/ftcWholeFoodsMarket). If this Notice
appears at (https://www.regulations.gov/
search/index.jsp), you may also file an
electronic comment through that
website. The Commission will consider
all comments that regulations.gov
forwards to it. You may also visit the
FTC website at https://www.ftc.govto
read the Notice and the news release
describing it.
A comment filed in paper form
should include the ‘‘Whole Foods
Market, Inc., Docket No. 9324‘‘ reference
both in the text and on the envelope,
and should be mailed or delivered to the
following address: Federal Trade
Commission, Office of the Secretary,
Room H-135, 600 Pennsylvania Avenue,
NW, Washington, DC 20580. The FTC is
requesting that any comment filed in
paper form be sent by courier or
overnight service, if possible, because
U.S. postal mail in the Washington area
and at the Commission is subject to
delay due to heightened security
precautions.
The Federal Trade Commission Act
(‘‘FTC Act’’) and other laws the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. The Commission will
consider all timely and responsive
public comments that it receives,
whether filed in paper or electronic
form. Comments received will be
available to the public on the FTC
website, to the extent practicable, at
(https://www.ftc.gov/os/
publiccomments.shtm). As a matter of
discretion, the Commission makes every
effort to remove home contact
information for individuals from the
public comments it receives before
placing those comments on the FTC
website. More information, including
routine uses permitted by the Privacy
Act, may be found in the FTC’s privacy
policy, at (https://www.ftc.gov/ftc/
privacy.shtm).
FOR FURTHER INFORMATION CONTACT:
Albert Y. Kim, Bureau of Competition,
600 Pennsylvania Avenue, NW,
Washington, D.C. 20580, (202) 3262952.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and § 3.25(f) the Commission
Rules of Practice, 16 CFR 3.25(f), notice
is hereby given that the above-captioned
consent agreement containing a consent
order to cease and desist, having been
filed with and accepted, subject to final
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17:55 Mar 12, 2009
Jkt 217001
approval, by the Commission, has been
placed on the public record for a period
of thirty (30) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement, and the allegations in the
complaint. An electronic copy of the
full text of the consent agreement
package can be obtained from the FTC
Home Page (for March 6, 2009), on the
World Wide Web, at (https://
www.ftc.gov/os/2009/03/index.htm). A
paper copy can be obtained from the
FTC Public Reference Room, Room 130H, 600 Pennsylvania Avenue, NW,
Washington, D.C. 20580, either in
person or by calling (202) 326-2222.
Public comments are invited, and may
be filed with the Commission in either
paper or electronic form. All comments
should be filed as prescribed in the
ADDRESSES section above, and must be
received on or before the date specified
in the DATES section.
Analysis of Agreement Containing
Consent Order to Aid Public Comment
I. INTRODUCTION
The Federal Trade Commission
(‘‘Commission’’) has accepted, subject to
final approval, an Agreement
Containing Consent Orders (‘‘Consent
Agreement’’) from Whole Foods Market,
Inc. (‘‘Whole Foods’’). The purpose of
the proposed Consent Agreement is to
remedy the competitive harm resulting
from Whole Foods’ acquisition of Wild
Oats Markets, Inc. (‘‘Wild Oats’’),
completed on or about August 28, 2007.
Under the terms of the proposed
Consent Agreement, Whole Foods is
required to maintain and subsequently
divest a significant portion of the Wild
Oats assets at issue in this matter.
The proposed Consent Agreement has
been placed on the public record for
thirty days to solicit comments from
interested persons. Comments received
during this period will become part of
the public record. After thirty days, the
Commission again will review the
proposed Consent Agreement and the
comments received, and decide whether
it should withdraw the Consent
Agreement or make it final.
The sole purpose of this analysis is to
facilitate public comment on the
Consent Agreement; it is not intended to
constitute an official interpretation of
the Consent Agreement or modify its
terms in any way.
valued at about $700 million. At the
time of the merger announcement,
Whole Foods (headquartered in Austin,
Texas) and Wild Oats (headquartered in
Boulder, Colorado) were the only
national operators of premium natural
and organic supermarkets (‘‘PNOS’’) in
the United States. Whole Foods
operated 194 stores in more than 37
states and the District of Columbia as
well as the United Kingdom, and Wild
Oats maintained 74 PNOS stores in 24
states.2
Wild Oats and Whole Foods offered a
unique selection of natural and organic
products, amenities, and high levels of
customer service that differentiated
them from conventional supermarkets,
mass merchants, and other categories of
food retailers. The combination of
Whole Foods and Wild Oats would
provide Whole Foods with market
power post-acquisition in the PNOS
market, leading to significant
anticompetitive effects. Staff’s
investigation confirmed that
repositioning by existing competitors or
new entry would be inadequate to deter
or counteract this harm to competition.
Having reason to believe the proposed
transaction would result in competitive
harm, the Commission authorized staff
to seek a temporary restraining order
(‘‘TRO’’) and preliminary injunctive
relief in federal district court and to
commence an administrative trial under
Part 3 of the Commission’s Rules of
Practice. Both the district court and
administrative complaints alleged that
the combined company would increase
prices, and decrease the quality and
number of offered services, if the merger
were permitted to close.
II. BACKGROUND
III. LITIGATION HISTORY
On June 6, 2007, the Commission
filed an action in the U.S. District Court
for the District of Columbia to seek a
TRO and a preliminary injunction
against the acquisition. The court
granted the TRO on June 7, 2007. On
June 28, 2007, the Commission issued
an administrative complaint pursuant to
Part 3 of its Rules. Given the
proceedings in the collateral federal
district court case, the Commission, as
a matter of discretion, stayed the Part 3
action in an order issued on August 7,
2007.
After a two-day hearing on July 31
and August 1, 2007, the district court
denied the Commission’s motion for a
preliminary injunction on August 16,
2007. On August 17, 2007, the
On February 21, 2007, Whole Foods
and Wild Oats publicly announced that
they had executed a merger agreement
pursuant to which Whole Foods would
acquire Wild Oats in a transaction
2 Wild Oats also operated stores under the
Henry’s Farmers Market banner (in Southern
California), the Sun Harvest banner (in Texas), and
the Capers Community Market banner (in British
Columbia, Canada).
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Commission filed with the U.S. Court of
Appeals for the D.C. Circuit a notice of
appeal and an emergency motion for an
injunction pending appeal. Although
the D.C. Circuit initially denied the
Commission’s emergency motion for an
injunction pending appeal, on July 29,
2008, the court of appeals reversed the
district court’s opinion and found that
the Commission had demonstrated the
requisite likelihood of success in the
preliminary injunction proceeding, and
remanded the matter to the district court
to address the equities and, if necessary,
fashion appropriate relief.3
Approximately one week later, on
August 8, 2008, the Commission lifted
the stay of the Part 3 proceedings, and
the Commission issued an amended
administrative complaint on September
8, 2008. The amended complaint alleged
anticompetitive effects in 22 overlap
markets (in which Whole Foods and
Wild Oats competed head-to-head) and
seven potential competition markets (in
which Whole Foods had planned to
enter but for the merger).
On January 8, 2009, the district court
issued a written order and opinion
holding that the issue of likelihood of
success had been fully resolved in the
Commission’s favor by the court of
appeals, and confirming that all that
remained was to weigh the equities and
impose relief, if necessary.
On January 26, 2009, Whole Foods
filed a motion to withdraw the matter
from administrative litigation, together
with a settlement agreement. The
Commission granted Whole Foods’
motion on January 29, 2009, and
temporarily withdrew the matter from
administrative adjudication. The
withdrawal was subsequently extended
until March 6, 2009, as Whole Foods
and Commission staff negotiated a
remedy in settlement of the ongoing
litigation.
IV. POST-ACQUISITION
INTEGRATION
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The acquired Wild Oats assets
included stores operating under the
Wild Oats banner as well as a number
of leases for Wild Oats stores that were
closed prior to the acquisition.4 After
3 Following Whole Foods’ August 26, 2008
petition for rehearing en banc in the court of
appeals, the D.C. Circuit denied the petition and
reissued the court’s judgment on November 21,
2008. The two judges of the panel majority reissued
opinions that reiterated their respective rationales
for concluding that the Commission had carried its
burden of showing a likelihood of success on the
merits and that the district court should conduct an
equities analysis to determine whether an
injunction should issue.
4 Immediately following the closing, on
September, 30, 2007, Whole Foods sold the Henry’s
and Sun Harvest stores that Wild Oats had been
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17:55 Mar 12, 2009
Jkt 217001
the district court’s August 16, 2007
decision denying the Commission’s
request for a preliminary injunction,
Whole Foods consummated its
acquisition of Wild Oats and began
integrating certain of the acquired Wild
Oats assets, rebranding Wild Oats stores,
closing other Wild Oats locations, and
terminating certain leases.
In the 18 months since the close of the
transaction, Whole Foods has closed a
number of Wild Oats stores. Whole
Foods has maintained leases and
physical assets relating to some, but not
all, of the closed Wild Oats locations.
Within the 29 geographic markets
alleged in the complaint, Whole Foods
is currently operating 31 former Wild
Oats stores and is maintaining control of
19 formerly operating Wild Oats stores.
V. THE PROPOSED CONSENT
AGREEMENT
In order to remedy, to a significant
degree, the anticompetitive effects of the
transaction, the Commission has entered
into the attached Consent Agreement
with Whole Foods, which requires the
divestiture of 32 stores, along with
associated Wild Oats intellectual
property and related assets, leases,
properties, and government permits.5
The Order to Maintain Assets will
require Whole Foods to maintain the
operating status of the open stores, and
maintain all leases (open and dark
stores) until divestiture is complete. See
Appendix A.
The inclusion of the Wild Oats
intellectual property is an important
component of the package. The
intellectual property includes the use,
without restriction, of the Wild Oats
name. Even months after the
acquisition, the Wild Oats brand name
retains significant brand equity that has
been developed over the past 20 years.
As shown in Appendices A & B of the
Decision and Order, Whole Foods is
required to divest a significant portion
of the acquired and currently operating
stores, and all of the formerly operating
stores for which leases still exist. These
planned divestitures will offer relief in
17 of the 29 geographic markets alleged
in the amended administrative
complaint, eliminating Whole Foods’
monopoly position in these markets,
and permitting consumers to once again
enjoy the benefits of competition
between PNOS operators. These stores
also could provide a springboard from
operating to Smart & Final Inc., a Los Angeles-based
food retailer.
5 Of the 32 stores, 13 are live stores and 19 are
‘‘dark’’ stores. Dark stores are former Wild Oats
stores that are not presently operating, but are
under the control of Whole Foods.
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10915
which the acquirer(s) can expand into
additional geographic markets.
The proposed order provides that the
responsibility for the marketing and sale
of the assets to be divested will
immediately be put in the hands of the
divestiture trustee.6 The trustee will
have six months within which to divest
the stores and related assets to a buyer
or buyers approved by the Commission.
If the trustee has received good faith
offers from potential acquirers for
certain stores within the initial sixmonth divestiture period, the
Commission may extend the divestiture
period for those stores for up to an
additional six months. The requirement
that any potential acquirer be approved
by the Commission is designed to
ensure that the potential acquirer(s)
intends to put the divested assets,
including the stores and the Wild Oats
brand, to use in the relevant product
market in competition with Whole
Foods.
VI. OTHER PROVISIONS OF THE
CONSENT AGREEMENT
The Consent Agreement contains
several additional provisions designed
to ensure that competition is, in fact,
replicated in the targeted geographic
markets. As referenced above, the
Consent Agreement requires
appointment of a divestiture trustee to
oversee the process for divesting the
Wild Oats assets. The Food Partners
(‘‘TFP’’) has been appointed to fill this
role. TFP is one of the leading
investment banking firms in the food
retailing industry, with particular
expertise in mergers, acquisition, and
divestiture services. TFP has advised on
a number of supermarket sales and
acquisitions, including divesting
packages of geographically dispersed
national chain supermarkets. For these
reasons, TFP is well-suited to serve as
divestiture trustee in this matter.
The Consent Agreement also includes
an Order to Maintain Assets (‘‘OMA’’),
which requires Whole Foods to
continue to operate the Wild Oats stores
until a buyer is identified and approved
by the Commission and final closing of
the purchase occurs. Because of
concerns about possible deterioration of
the stores during the divestiture period,
the OMA further provides for the
appointment of an interim monitor to
ensure that Whole Foods maintains the
viability, marketability, and
competitiveness of the assets and does
6 Pursuant to the proposed Consent Agreement,
although the divestiture of the stores may be made
to one or more Commission-approved buyers, the
Wild Oats-associated intellectual property may be
divested to only a single buyer.
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Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Notices
not terminate the operation of any store
included in the divestiture package.
VII. POST-CONSUMMATION RELIEF
The absence of pre-consummation
relief from the district court, and Whole
Foods’ subsequent integration activities,
have made it more difficult for the
Commission to obtain complete relief in
this matter. However, the proposed
Consent Agreement will provide
substantial relief to consumers in 17
geographic markets across the United
States. Moreover, acceptance of the
proposed Consent Agreement will bring
immediate, certain relief and avoid the
expense and uncertainty inherent in
continued litigation. Reestablishing a
PNOS competitor in these markets
under the Wild Oats banner will
reintroduce direct price, quality, and
service competition in these areas,
restoring to a substantial degree the
competition that was eliminated by the
acquisition, providing important
benefits to consumers, and perhaps
creating a springboard for broader
competition nationwide.
By direction of the Commission.
Donald S. Clark
Secretary
[FR Doc. E9–5519 Filed 3–12–09: 8:45 am]
[BILLING CODE 6750–01–S]
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Disease Control and
Prevention
[30 Day–08–0740]
Agency Forms Undergoing Paperwork
Reduction Act Review
The Centers for Disease Control and
Prevention (CDC) publishes a list of
barriers to HIV-related secondary
prevention services; utilization of HIVrelated medical services; and adherence
to drug regimens. Collection of data
from patient medical records provide
information on: Demographics and
insurance status; the prevalence and
incidence of AIDS-defining
opportunistic illnesses and comorbidities related to HIV disease; the
receipt of prophylactic and
antiretroviral medications; and whether
patients are receiving screening and
treatment according to Public Health
Service guidelines. The provider survey
will collect data from a nationally
representative sample of HIV care
providers selected to participate in
MMP. The provider survey will collect
information on: Health care providers’
professional training history, ongoing
sources of training and continuing
education about HIV care and treatment,
perceptions of patients’ barriers to care
and reasons for declining HIV care,
awareness of HIV related resources, and
approach to antiretroviral therapy
management and HIV risk reduction
counseling. No other Federal agency
collects national population-based
behavioral and clinical information
from HIV-infected adults in care or HIV
care providers.
The data will have significant
implications for policy, program
development, and resource allocation at
the state/local and national levels. Users
of MMP data include, but are not
limited to, Federal agencies, State and
local health departments, clinicians,
researchers, and HIV prevention and
care planning groups.
There are no costs to the respondents
other than their time.
The total estimated annualized
burden hours are 9,603.
information collection requests under
review by the Office of Management and
Budget (OMB) in compliance with the
Paperwork Reduction Act (44 U.S.C.
Chapter 35). To request a copy of these
requests, call the CDC Reports Clearance
Officer at (404) 639–5960 or send an email to omb@cdc.gov. Send written
comments to CDC Desk Officer, Office of
Management and Budget, Washington,
DC or by fax to (202) 395–6974. Written
comments should be received within 30
days of this notice.
Proposed Project
Medical Monitoring Project (MMP)
(OMB No. 0920–0740, exp. June
2010.)—Revision—National Center for
HIV, Viral Hepatitis, STD and TB
Prevention (NCHHSTP), Centers for
Disease Control and Prevention (CDC).
Background and Brief Description
Some MMP interview questions were
revised to make them easier for patients
to understand and respond
appropriately. Medical record
abstraction sections were removed, and
a provider survey has been added.
Revisions to previously approved
instruments have been included. The
purpose of MMP is to supplement the
HIV/AIDS surveillance programs in 26
selected state and local health
departments, which collect information
on persons diagnosed with, living with,
and dying from HIV infection and AIDS.
MMP collects data on behaviors and
clinical outcomes from a probability
sample of HIV-infected adults receiving
care in the U.S. Collection of data from
interviews with HIV-infected patients
provides information on patient
demographics, and the current levels of
behaviors that may facilitate HIV
transmission: Sexual and drug use
behaviors; patients’ access to, use of and
ESTIMATED ANNUALIZED BURDEN HOURS
Number of respondents
Form name
Patients ...........................................................
Patients ...........................................................
Facility office staff ...........................................
Facility office staff ...........................................
Facility office staff ...........................................
Facility office staff ...........................................
Physicians, nurse practitioners, physician’s
assistants.
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Type of respondent
Number of responses per
respondent
7,988
332
7,488
936
1,030
3,120
1,440
1
1
1
1
1
1
1
Standard Interview .........................................
Short Interview ...............................................
Medical Record Abstraction ...........................
None (providing estimated patient loads) ......
None providing patient lists) ..........................
None approaching patients for enrollment) ...
Provider Survey ..............................................
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17:55 Mar 12, 2009
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Average burden per response
(in hours)
45/60
20/60
3/60
2
30/60
5/60
20/60
]]>Agencies
[Federal Register Volume 74, Number 48 (Friday, March 13, 2009)]
[Notices]
[Pages 10913-10916]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-5519]
=======================================================================
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FEDERAL TRADE COMMISSION
[Docket No. 9324]
Whole Foods Market, Inc.; Analysis of Agreement Containing
Consent Orders to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the complaint and
the terms of the consent order--embodied in the consent agreement--that
would settle these allegations.
DATES: Comments must be received on or before April 6, 2009.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to``Whole Foods
Market, Docket No. 9324'' to facilitate the organization of comments.
Please note that your comment--including your name and your state--will
be placed on the public record of this proceeding, including on the
publicly accessible FTC website, at (https://www.ftc.gov/os/
publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as an individual's Social Security
Number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include any ``[t]rade secret or any
commercial or financial information which is obtained from any person
and which is privileged or confidential. . . .,'' as provided in
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which
confidential treatment is requested must be filed in paper form, must
be clearly labeled ``Confidential,'' and must comply with FTC Rule
4.9(c).\1\
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\1\ FTC Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted by using the following weblink: (https://
secure.commentworks.com/ftc-WholeFoodsMarket) (and following the
instructions on the web-based form). To ensure that the Commission
considers
[[Page 10914]]
an electronic comment, you must file it on the web-based form at the
weblink:(https://secure.commentworks.com/ftc-WholeFoodsMarket). If this
Notice appears at (https://www.regulations.gov/search/index.jsp), you
may also file an electronic comment through that website. The
Commission will consider all comments that regulations.gov forwards to
it. You may also visit the FTC website at https://www.ftc.govto read the
Notice and the news release describing it.
A comment filed in paper form should include the ``Whole Foods
Market, Inc., Docket No. 9324`` reference both in the text and on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission, Office of the Secretary, Room H-135, 600
Pennsylvania Avenue, NW, Washington, DC 20580. The FTC is requesting
that any comment filed in paper form be sent by courier or overnight
service, if possible, because U.S. postal mail in the Washington area
and at the Commission is subject to delay due to heightened security
precautions.
The Federal Trade Commission Act (``FTC Act'') and other laws the
Commission administers permit the collection of public comments to
consider and use in this proceeding as appropriate. The Commission will
consider all timely and responsive public comments that it receives,
whether filed in paper or electronic form. Comments received will be
available to the public on the FTC website, to the extent practicable,
at (https://www.ftc.gov/os/publiccomments.shtm). As a matter of
discretion, the Commission makes every effort to remove home contact
information for individuals from the public comments it receives before
placing those comments on the FTC website. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy, at (https://www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Albert Y. Kim, Bureau of Competition,
600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 326-2952.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 3.25(f)
the Commission Rules of Practice, 16 CFR 3.25(f), notice is hereby
given that the above-captioned consent agreement containing a consent
order to cease and desist, having been filed with and accepted, subject
to final approval, by the Commission, has been placed on the public
record for a period of thirty (30) days. The following Analysis to Aid
Public Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for March 6, 2009), on the World Wide Web, at (https://www.ftc.gov/os/
2009/03/index.htm). A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
Analysis of Agreement Containing Consent Order to Aid Public Comment
I. INTRODUCTION
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') from Whole Foods Market, Inc. (``Whole Foods''). The
purpose of the proposed Consent Agreement is to remedy the competitive
harm resulting from Whole Foods' acquisition of Wild Oats Markets, Inc.
(``Wild Oats''), completed on or about August 28, 2007. Under the terms
of the proposed Consent Agreement, Whole Foods is required to maintain
and subsequently divest a significant portion of the Wild Oats assets
at issue in this matter.
The proposed Consent Agreement has been placed on the public record
for thirty days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission again will review the proposed
Consent Agreement and the comments received, and decide whether it
should withdraw the Consent Agreement or make it final.
The sole purpose of this analysis is to facilitate public comment
on the Consent Agreement; it is not intended to constitute an official
interpretation of the Consent Agreement or modify its terms in any way.
II. BACKGROUND
On February 21, 2007, Whole Foods and Wild Oats publicly announced
that they had executed a merger agreement pursuant to which Whole Foods
would acquire Wild Oats in a transaction valued at about $700 million.
At the time of the merger announcement, Whole Foods (headquartered in
Austin, Texas) and Wild Oats (headquartered in Boulder, Colorado) were
the only national operators of premium natural and organic supermarkets
(``PNOS'') in the United States. Whole Foods operated 194 stores in
more than 37 states and the District of Columbia as well as the United
Kingdom, and Wild Oats maintained 74 PNOS stores in 24 states.\2\
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\2\ Wild Oats also operated stores under the Henry's Farmers
Market banner (in Southern California), the Sun Harvest banner (in
Texas), and the Capers Community Market banner (in British Columbia,
Canada).
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Wild Oats and Whole Foods offered a unique selection of natural and
organic products, amenities, and high levels of customer service that
differentiated them from conventional supermarkets, mass merchants, and
other categories of food retailers. The combination of Whole Foods and
Wild Oats would provide Whole Foods with market power post-acquisition
in the PNOS market, leading to significant anticompetitive effects.
Staff's investigation confirmed that repositioning by existing
competitors or new entry would be inadequate to deter or counteract
this harm to competition.
Having reason to believe the proposed transaction would result in
competitive harm, the Commission authorized staff to seek a temporary
restraining order (``TRO'') and preliminary injunctive relief in
federal district court and to commence an administrative trial under
Part 3 of the Commission's Rules of Practice. Both the district court
and administrative complaints alleged that the combined company would
increase prices, and decrease the quality and number of offered
services, if the merger were permitted to close.
III. LITIGATION HISTORY
On June 6, 2007, the Commission filed an action in the U.S.
District Court for the District of Columbia to seek a TRO and a
preliminary injunction against the acquisition. The court granted the
TRO on June 7, 2007. On June 28, 2007, the Commission issued an
administrative complaint pursuant to Part 3 of its Rules. Given the
proceedings in the collateral federal district court case, the
Commission, as a matter of discretion, stayed the Part 3 action in an
order issued on August 7, 2007.
After a two-day hearing on July 31 and August 1, 2007, the district
court denied the Commission's motion for a preliminary injunction on
August 16, 2007. On August 17, 2007, the
[[Page 10915]]
Commission filed with the U.S. Court of Appeals for the D.C. Circuit a
notice of appeal and an emergency motion for an injunction pending
appeal. Although the D.C. Circuit initially denied the Commission's
emergency motion for an injunction pending appeal, on July 29, 2008,
the court of appeals reversed the district court's opinion and found
that the Commission had demonstrated the requisite likelihood of
success in the preliminary injunction proceeding, and remanded the
matter to the district court to address the equities and, if necessary,
fashion appropriate relief.\3\ Approximately one week later, on August
8, 2008, the Commission lifted the stay of the Part 3 proceedings, and
the Commission issued an amended administrative complaint on September
8, 2008. The amended complaint alleged anticompetitive effects in 22
overlap markets (in which Whole Foods and Wild Oats competed head-to-
head) and seven potential competition markets (in which Whole Foods had
planned to enter but for the merger).
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\3\ Following Whole Foods' August 26, 2008 petition for
rehearing en banc in the court of appeals, the D.C. Circuit denied
the petition and reissued the court's judgment on November 21, 2008.
The two judges of the panel majority reissued opinions that
reiterated their respective rationales for concluding that the
Commission had carried its burden of showing a likelihood of success
on the merits and that the district court should conduct an equities
analysis to determine whether an injunction should issue.
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On January 8, 2009, the district court issued a written order and
opinion holding that the issue of likelihood of success had been fully
resolved in the Commission's favor by the court of appeals, and
confirming that all that remained was to weigh the equities and impose
relief, if necessary.
On January 26, 2009, Whole Foods filed a motion to withdraw the
matter from administrative litigation, together with a settlement
agreement. The Commission granted Whole Foods' motion on January 29,
2009, and temporarily withdrew the matter from administrative
adjudication. The withdrawal was subsequently extended until March 6,
2009, as Whole Foods and Commission staff negotiated a remedy in
settlement of the ongoing litigation.
IV. POST-ACQUISITION INTEGRATION
The acquired Wild Oats assets included stores operating under the
Wild Oats banner as well as a number of leases for Wild Oats stores
that were closed prior to the acquisition.\4\ After the district
court's August 16, 2007 decision denying the Commission's request for a
preliminary injunction, Whole Foods consummated its acquisition of Wild
Oats and began integrating certain of the acquired Wild Oats assets,
rebranding Wild Oats stores, closing other Wild Oats locations, and
terminating certain leases.
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\4\ Immediately following the closing, on September, 30, 2007,
Whole Foods sold the Henry's and Sun Harvest stores that Wild Oats
had been operating to Smart & Final Inc., a Los Angeles-based food
retailer.
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In the 18 months since the close of the transaction, Whole Foods
has closed a number of Wild Oats stores. Whole Foods has maintained
leases and physical assets relating to some, but not all, of the closed
Wild Oats locations. Within the 29 geographic markets alleged in the
complaint, Whole Foods is currently operating 31 former Wild Oats
stores and is maintaining control of 19 formerly operating Wild Oats
stores.
V. THE PROPOSED CONSENT AGREEMENT
In order to remedy, to a significant degree, the anticompetitive
effects of the transaction, the Commission has entered into the
attached Consent Agreement with Whole Foods, which requires the
divestiture of 32 stores, along with associated Wild Oats intellectual
property and related assets, leases, properties, and government
permits.\5\ The Order to Maintain Assets will require Whole Foods to
maintain the operating status of the open stores, and maintain all
leases (open and dark stores) until divestiture is complete. See
Appendix A.
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\5\ Of the 32 stores, 13 are live stores and 19 are ``dark''
stores. Dark stores are former Wild Oats stores that are not
presently operating, but are under the control of Whole Foods.
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The inclusion of the Wild Oats intellectual property is an
important component of the package. The intellectual property includes
the use, without restriction, of the Wild Oats name. Even months after
the acquisition, the Wild Oats brand name retains significant brand
equity that has been developed over the past 20 years.
As shown in Appendices A & B of the Decision and Order, Whole Foods
is required to divest a significant portion of the acquired and
currently operating stores, and all of the formerly operating stores
for which leases still exist. These planned divestitures will offer
relief in 17 of the 29 geographic markets alleged in the amended
administrative complaint, eliminating Whole Foods' monopoly position in
these markets, and permitting consumers to once again enjoy the
benefits of competition between PNOS operators. These stores also could
provide a springboard from which the acquirer(s) can expand into
additional geographic markets.
The proposed order provides that the responsibility for the
marketing and sale of the assets to be divested will immediately be put
in the hands of the divestiture trustee.\6\ The trustee will have six
months within which to divest the stores and related assets to a buyer
or buyers approved by the Commission. If the trustee has received good
faith offers from potential acquirers for certain stores within the
initial six-month divestiture period, the Commission may extend the
divestiture period for those stores for up to an additional six months.
The requirement that any potential acquirer be approved by the
Commission is designed to ensure that the potential acquirer(s) intends
to put the divested assets, including the stores and the Wild Oats
brand, to use in the relevant product market in competition with Whole
Foods.
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\6\ Pursuant to the proposed Consent Agreement, although the
divestiture of the stores may be made to one or more Commission-
approved buyers, the Wild Oats-associated intellectual property may
be divested to only a single buyer.
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VI. OTHER PROVISIONS OF THE CONSENT AGREEMENT
The Consent Agreement contains several additional provisions
designed to ensure that competition is, in fact, replicated in the
targeted geographic markets. As referenced above, the Consent Agreement
requires appointment of a divestiture trustee to oversee the process
for divesting the Wild Oats assets. The Food Partners (``TFP'') has
been appointed to fill this role. TFP is one of the leading investment
banking firms in the food retailing industry, with particular expertise
in mergers, acquisition, and divestiture services. TFP has advised on a
number of supermarket sales and acquisitions, including divesting
packages of geographically dispersed national chain supermarkets. For
these reasons, TFP is well-suited to serve as divestiture trustee in
this matter.
The Consent Agreement also includes an Order to Maintain Assets
(``OMA''), which requires Whole Foods to continue to operate the Wild
Oats stores until a buyer is identified and approved by the Commission
and final closing of the purchase occurs. Because of concerns about
possible deterioration of the stores during the divestiture period, the
OMA further provides for the appointment of an interim monitor to
ensure that Whole Foods maintains the viability, marketability, and
competitiveness of the assets and does
[[Page 10916]]
not terminate the operation of any store included in the divestiture
package.
VII. POST-CONSUMMATION RELIEF
The absence of pre-consummation relief from the district court, and
Whole Foods' subsequent integration activities, have made it more
difficult for the Commission to obtain complete relief in this matter.
However, the proposed Consent Agreement will provide substantial relief
to consumers in 17 geographic markets across the United States.
Moreover, acceptance of the proposed Consent Agreement will bring
immediate, certain relief and avoid the expense and uncertainty
inherent in continued litigation. Reestablishing a PNOS competitor in
these markets under the Wild Oats banner will reintroduce direct price,
quality, and service competition in these areas, restoring to a
substantial degree the competition that was eliminated by the
acquisition, providing important benefits to consumers, and perhaps
creating a springboard for broader competition nationwide.
By direction of the Commission.
Donald S. Clark
Secretary
[FR Doc. E9-5519 Filed 3-12-09: 8:45 am]
[BILLING CODE 6750-01-S]
