Whole Foods Chief Says He Bashed Rival on Web

By Josh Fineman and Danny King
Bloomberg News
Thursday, July 12, 2007

John Mackey, the chief executive of Whole Foods, criticized Wild Oats Markets in anonymous messages on the Internet in the years before his company agreed to take over the smaller rival, Mackey revealed yesterday. The critical comments were posted on online financial chat boards hosted by Yahoo under the user name "rahodeb" from 1999 to mid-2006, Mackey said in an e-mailed statement.

Wild Oats "has lost their way and no longer has a sense of mission or even a well thought out theory of the business," rahodeb posted on Yahoo's Whole Foods message board on March 28, 2006. "They are floundering around hoping to find a viable strategy that may stop their erosion."

Mackey's online identity was described in a legal document released Tuesday by the Federal Trade Commission. The agency is suing to block Whole Foods' acquisition of Wild Oats because it thinks the combined company would control too much of the natural-foods market and thereby suppress competition. Whole Foods is the largest U.S. natural-foods grocer.

Wild Oats spokeswoman Sonja Tuitele declined to comment.

Mackey, 53, posted "under an alias to avoid having his comments associated with the company and to avoid others placing too much emphasis on his remarks," Whole Foods said in an e-mailed statement.

Whole Foods, of Austin, agreed in February to buy Wild Oats for $565 million. The company has said it will "vigorously challenge" the FTC and continue to pursue the merger.

Wild Oats of Boulder, Colo., "is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space," Mackey told board members, according to the suit. "Eliminating them means eliminating this threat forever, or almost forever."

Mackey's comments have threatened the merger, said Robert Lande, a professor at the University of Baltimore Law School who worked for the FTC from 1978 to 1984. "This merger is in real big trouble thanks to him shooting his mouth off," Lande said.

The postings, however, probably didn't have much impact "without his name and title on them," Lande said. "Proving in court that Wild Oats' stock price would have risen more without those statements, that's an impossible case to me."

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