Whole Foods Market Inc., the largest U.S. natural-foods grocer, faces a renewed antitrust challenge from the Federal Trade Commission over its $565 million acquisition of Wild Oats Markets Inc.

The FTC appealed a district judge's Aug. 16 ruling that it failed to show the acquisition would hurt consumers. In an Oct. 22 filing with a federal appeals court in Washington, the FTC opposed a motion by Whole Foods to dismiss the appeal as moot, saying the takeover could still be undone.

Whole Foods completed its purchase of Wild Oats less than two weeks after U.S. Judge Paul Friedman's ruling. The FTC said integration of the stores, which it opposes on competitive grounds, isn't complete, and there is still time to stop it.

"It is clearly possible to fashion such an order here, both to protect consumers from any interim harm the acquisition may cause them and to preserve the possibility of reconstituting Wild Oats as an independent competitor," the FTC said in its filing.

The government argued there is still time to stop the merger because Whole Foods has said the integration of Wild Oats may take as long as two years.

Mitch Katz, a spokesman for the agency, and Whole Foods spokeswoman Amy Schaefer both declined to comment.

Charles F. Rule, an antitrust attorney and former director of the Justice Department's antitrust division, said the FTC's decision to continue its appeal is surprising and unlikely to succeed.

"If the court of appeals thought they had a chance, they would have granted the stay," Rule said, as the FTC requested in August.

Whole Foods has said it will close fewer stores than originally planned and those stores slated for closure will remain open for several months or more. The company is building a new store at Trolley Square in Salt Lake City that is scheduled for completion in late 2009 or early 2010. Whole Foods recently announced that it will close the downtown Wild Oats store, at 645 E. 400 South, upon the completion of the new store.

Utah's other Wild Oats stores, in Salt Lake City, Cottonwood Heights, West Jordan and Park City, will remain open and will be converted to Whole Foods markets.

Whole Foods, based in Austin, Texas, agreed to buy Wild Oats for $18.50 a share. The FTC sued to block the transaction in June, claiming consumers would be harmed by higher prices and decreased competition. The company, which has 197 stores in the United States, Canada and the United Kingdom, added 110 locations by buying Wild Oats.