Tuesday, October 28, 2008

Whole Foods Opposes FTC Rule Changes, Merger Challenge Proceeds

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

A month after the FTC announced plans to streamline its adjudicative proceedings, Whole Foods Market, Inc. announced objections to the proposal. The agency issued a notice of proposed rulemaking seeking public comment on proposed rule revisions that would amend Parts 3 and 4 of the FTC Rules of Practice, which concern the process of administrative adjudication at the agency.

On October 27, Whole Foods submitted comments opposing the new and amended regulations. The specialty grocer also objected to the agency’s “limited 30-day comment period.” Whole Foods said that it was forming an “Ad Hoc Committee for FTC Fair Pay” and it encouraged other businesses and organizations to submit comments to the FTC seeking an extension of the comment period, as well as a rejection of the proposed regulations.

Several of the proposed rule revisions allow an administrative law judge or the Commission to impose tighter time periods during the adjudicatory process, according to the FTC. Under the proposal, evidentiary hearings generally would be set five months from the date of the complaint in a merger case and eight months from the date of the complaint in a non-merger case.

According to Whole Foods, the proposed regulations “would prevent many, if not most, companies from having enough time to defend themselves from FTC actions attempting to block mergers.”

In addition, Whole Foods contends that the proposed regulations “would undermine the independence of Administrative Law Judges . . . who are supposed to be the objective fact-finders before the FTC makes its final judgment."

Current Acquisition Challenge

An administrative proceeding to determine the legality of the consummated merger of Whole Foods Market, Inc. and Wild Oats Markets, Inc. is moving forward. The trial is set to begin in February 2009. In that proceeding, Whole Foods had objected to the appointment of Commissioner J. Thomas Rosch to serve as presiding official for a scheduling conference and had sought to disqualify the Commission or any individual Commissioner from acting as the presiding officer for all purposes.

Recently, the Commission has issued a protective order governing confidential material (CCH Trade Regulation Reporter ¶16,209) and has designated Acting Chief Administrative Law Judge D. Michael Chappell as the administrative law judge presiding over the adjudicative proceeding in the matter (CCH Trade Regulation Reporter ¶16,210).

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