business news in context, analysis with attitude

The Wall Street Journal reports that Whole Foods has won a legal battle to subpoena confidential marketing and financial information from a Portland, Oregon, competitor, New Seasons Market.

Whole Foods maintains that it needs the information to do battle with the US Federal Trade Commission (FTC), which is trying to unravel the retailer’s $565 million acquisition of Wild Oats one year after it was completed. By getting New Seasons’ market information, Whole Foods says, it will be able to prove that it has not created a monopoly that will diminish competition and result in increased prices.

New Seasons isn’t the only competitor that Whole Foods is targeting; published reports say that it is looking for similar information from more than 90 competitors around the country, and New Seasons’ attempt to challenge Whole Foods was seen as a barometer of how courts would rule in the case.

Whole Food has maintained that only its lawyers would see the information, and that it would not be made available to its marketing people.

According to the story, “New Seasons said Whole Foods' document requests were burdensome and estimated that it could cost at least $250,000 to produce everything Whole Foods requested. The grocer also said that it was not confident that its trade secrets would be protected as promised. The FTC accidentally disclosed confidential business information earlier in the case, while other sensitive information was given to a Whole Foods in-house lawyer, New Seasons said.

“An FTC administrative law judge rejected New Seasons' request Tuesday, saying its information would be protected and that turning it over was not an undue burden.”

No word yet on whether New Seasons CEO Brian Rohter plans to appeal the ruling.

KC's View:
This is an utter crock.

I said it before, and I’ll say it again. If I ran New Seasons, I’d take my paper files and computer records and toss them into the Willamette River rather than turn them over to Whole Foods.

It is ironic that an utterly absurd FTC effort to target Whole Foods is resulting in a completely unfair ruling that puts its competitors in a disadvantageous position – which is exactly what the FTC supposedly was trying to avoid.

One can hope that once a new administration takes office in Washington – 33 days from now – somebody will have the common sense to call a halt to this nonsense. Of course, we also have to hope that New Seasons and its brethren are able to stave off the lawyers for a month…because the damage that could be done when their records are turned over could be irreparable.