As expected, the Federal Trade Commission's challenge to Whole Foods Market's (NASDAQ:WFMI) planned acquisition of Wild Oats (NASDAQ:OATS) is not something the leading organic grocer is taking lying down. Whole Foods has laid out its side of the story publicly on its CEO's blog. That's a good move, since recent headlines proclaiming Whole Foods' desire to eliminate potential price wars seemed a bit hysterical.

The FTC released information to promote its view that Whole Foods is trying to get a stranglehold on the organic market by acquiring Wild Oats. In what seems to be the most salient point in the regulatory agency's anti-acquisition argument, it says Whole Foods wants to avoid price wars between the two companies. The FTC also contends that the acquisition would eliminate meaningful competition in the organic niche.  

But trying to avoid price wars in a few markets isn't enough of an argument to make the FTC's move make sense. As I pointed out several weeks ago, if organic customers get fed up with the prices at a place like Whole Foods, they have many other options. In addition to all of the farmers and indie outfits out there, consumers can choose from among big names such as Wal-Mart (NYSE:WMT), Safeway (NYSE:SWY), Kroger (NYSE:KR), Trader Joe's, and any number of other rivals. They all sell organic goods, and often at lower prices than Whole Foods offers. Indeed, many of us had already wondered whether economies of scale would allow the combined Whole Foods/Wild Oats entity to actually lower prices -- something Whole Foods knows it must do to compete. (The Whole Foods blog post that I've mentioned supports that idea.)  

In the spirit of competition, why shouldn't Whole Foods want to buy Wild Oats if the price is right -- and, at the same time, block the possibility that a conventional grocer might snap up a pure-play rival? Given that possible scenario, I can see why Wild Oats' stakeholders of all stripes would prefer teaming up with Whole Foods: Doing so wouldn't alter its corporate mission or brand. It all sounds like the normal course of competition to me, particularly because the much-talked-about organic niche is clearly moving into the realm of mainstream consumption.  

I often read the blog that Chairman and CEO John Mackey maintains on the Whole Foods website. His recent post defending the Wild Oats deal displays his company's position for all stakeholders to read. I especially encourage Whole Foods shareholders to read it.

Mackey provides a lot of interesting food for thought in his post. He shares his impression that the FTC asked for more supporting documentation than was required of the Exxon Mobil (NYSE:XOM) merger. He also gives point-by-point explanations of his company's thinking on the merger issue, including some honest descriptions of other competitive concerns. Among them, he notes that companies such as Trader Joe's and Wegman's are actually more formidable rivals than Wild Oats is. That's probably an easy point to forget. Wild Oats may be a "super-natural" pure play, but it also hasn't been firing on all cylinders lately -- another relevant point that appears to have been forgotten in all of the FTC ruckus.

When crusades go bad
Of course, although everybody may love a good crusade, there are some elements of risk here. I have great respect for Mackey; his philosophical leanings and entrepreneurial spirit make him my favorite corporate leader. However, I'm a little concerned that his blog entry could turn out to be an awfully distracting interlude. The post includes a detailed argument for why the Wild Oats acquisition makes sense and why it's not anticompetitive, given the current landscape. Much of Mackey's argument makes the FTC's notions look as simplistic and wrong-headed as many of us have surmised they are.

However, I've noticed that some analysts and commentators are criticizing Mackey's diatribe against the FTC. Sure, the post may not be conventional good diplomacy. It does seem like a rather audacious logic disconnect. Some may even call it arrogant or self-incriminating. Yet Mackey's honest communication -- which includes what appears to be very real ire -- may very well make him a hero to some, since the public seems so frustrated with regulators, and the specter of corruption, these days.

Besides, we're talking about a guy who is used to bucking convention. And I'd say his argument is going to hit a nerve with the public in a good way, judging by the tone of reader email I've received on this issue, much of it expressing frustration that in what appears to be an extremely merger-happy climate, this particular deal is under such strict regulator scrutiny.

Let's just hope Mackey can back down if he ever needs to, for the long-term health of the company. Not that this isn't a fight he shouldn't take on. I believe that he should. I only hope that it all won't lead to too much operational distraction -- obviously, some amount of distraction will be difficult to avoid -- and that it will all be resolved sooner rather than later.

CEO crusades, after all, can go too far. One that might haunt some investors is's (NASDAQ:OSTK) Patrick Byrne's fight against naked short selling. Whether you agree with Byrne's crusade or not, the distractions over the past several years certainly don't appear to have been good for that company's shareholders. Management's distraction from the company's core business, in fact, is why David Gardner removed from his lineup of Motley Fool Rule Breakers picks in February 2006. Granted, Byrne's fight and Mackey's are two entirely different things, but the reality that all such situations take up time, thought, resources, and emotion remains.

Fortunately, though, there appears to be a time limit built in on this crusade: Mackey's blog post said the company has petitioned for an expedited schedule to resolve the situation before the Aug. 31 deadline for the merger agreement.   

Best of times or worst of times?
It's not an easy time for Whole Foods shareholders. Some of us may feel confident about Whole Foods as a long-term investment, but a messy skirmish with regulators -- and judging by Mackey's comments, "messy" might be an understatement, since the fightin' words are flying -- probably adds a degree of negativity and uncertainty for some people. I've certainly seen a lot of media coverage that seems pretty negative about the current situation. Of course, such times are often good for investors who can see the big picture for a company beyond short-term noise. But in this case, it looks as though that noise is going to be humming away pretty loudly in the background for the time being.

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Alyce Lomax owns shares of Whole Foods Market. The Fool has a disclosure policy.