The merger last year between US natural and organics retailers Whole Foods Market and Wild Oats Markets has been thrown into question after a US appeals court today (29 July) reversed the ruling that cleared the deal.

According to reports in the US, the Court of Appeals in the District of Columbia said a distrct judge had made an error when he turned down requests from regulators to block the US$565m deal.

Whole Foods first announced plans to buy Wild Oats in February last year; by June, the US Federal Trade Commission had begun legal action in a bid to block the move on competition grounds.

The FTC's hopes were seemingly dashed when a judge denied the regulator an injunction to block the merger and the companies went ahead with the deal.

The FTC had argued that a merger of Whole Foods and Wild Oats would hurt comprtition in parts of the US. Whole Foods argued that it was competing with all major supermarkets in the US, not just those in the organic sector.

Nevertheless, the appeals court has pushed the case back to the original judge and rejected Whole Foods' argument that the FTC could not unravel a merger that already proceeded.

Whole Foods has already closed a number of Wild Oats outlets and offloaded a few dozen more.

Officials at the FTC and Whole Foods could not be reached for immediate comment.