Washington D.C. A federal appeals court on Tuesday overturned a lower court ruling from last year that allowed Whole Foods Market Inc. to acquire rival supermarket chain Wild Oats Markets Inc.
The two to one ruling sends the case back to the lower court for further consideration, but doesn't stop Whole Foods' integration of the Wild Oats chain or require that the deal be undone.
However, if the district court ultimately rules in favor of the Federal Trade Commission (FTC), which sought last year to block the deal, it could disrupt Whole Foods' efforts to combine the companies.
Whole Foods spokeswoman Kate Lowery said the company is disappointed with the decision and is "evaluating its legal options," which include asking all 10 judges on the appeals court to review the case.
Jeffrey Schmidt, director of the FTC's Bureau of Competition, said the agency was pleased by the ruling.
The FTC argues that the transaction would stifle competition by combining the two leading organic supermarket chains and lead to higher prices.
Veronica Kayne, a former FTC antitrust official and now an attorney at Haynes & Boone in Washington, said the appeals court's decision could make it easier for the government to obtain preliminary injunctions blocking future transactions.
Whole Foods purchased the 110-store Wild Oats for $565 million.
A lawyer for Whole Foods said in April that the company had already sold 35 of Wild Oats' stores and closed 12 more. Another third of the remaining Wild Oats stores have been converted to Whole Foods outlets.