The US Federal Trade Commission (FTC) filed a lawsuit to block the proposed acquisition of Wild Oats Markets by Whole Foods on antitrust grounds and is seeking a temporary restraining order and preliminary injunction pending a trial on the merits. The lawsuit, filed June 6, had been redacted initially because of concerns that it contained proprietary material.

Whole Foods, the biggest natural-foods chain, also intends to close numerous Wild Oats stores and sell several if the US$565 million deal goes forward, the FTC said in the lawsuit. Over the years, Whole Foods has made a practice of buying up most if its "super-natural" rivals, leaving only Wild Oats as its competitor. The FTC said merging Whole Foods and Wild Oats would reduce competition and raise prices, arguing that the super-natural market is distinct from the conventional supermarket industry.

However, Whole Foods CEO John Mackey, said the merger would "avoid nasty price wars" in several cities where the two compete.

"My blog posting provides a detailed look into Whole Foods Market's decision-making process regarding the merger, as well as our company's experience interacting with the FTC staff assigned to this merger," said Mackey in a statement. "I provide explanations of how I think the FTC, to date, has neglected to do its homework appropriately, especially given the statements made regarding prices, quality, and service levels in its complaint. I also provide a glimpse into the bullying tactics used against Whole Foods Market by this taxpayer-funded agency."

However, according to government lawyers, Mackey told his board that if Whole Foods bought its leading rival, the company would "eliminate forever" the possibility that anyone else could create a nationwide competitor in the natural and organic grocery business.

Federal Trade Commission lawyers reported the comments in a request for a temporary injunction to block Whole Foods from buying Wild Oats. A federal judge approved the request. Mackey criticized the reasoning behind the FTC's judgment that Whole Foods had violated antitrust laws by trying to eliminate a competitor.

"If eliminating a competitor is inherently "bad" or "wrong" then the FTC should probably never allow any mergers to ever occur, because most mergers necessarily mean the elimination of a competitor from the marketplace," Mackey wrote in his blog.