The FTC says that the purchase of Wild Oats Markets by Whole Foods Market, would increase concentration of the country’s natural and organic supermarkets and lead to increased prices, The New York Times reports.

The agency said June 5 that it planned to block the acquisition of Wild Oats, the second-largest natural-foods grocer after Whole Foods.

“Consumers have benefited directly from the price and quality competition between Whole Foods and Wild Oats,” the agency said in a sealed lawsuit filed this week, portions of which were released yesterday. “If the acquisition occurs, those benefits will be lost.”

Whole Foods plans to challenge the F.T.C.’s decision. “We are very disappointed by this decision and we intend to vigorously challenge the FTC in court,” said John Mackey, chairman and chief executive officer of Whole Foods Market. “The FTC has failed to recognize the robust competition in the supermarket industry, which has grown more intense as competitors increase their offerings of natural, organic and fresh products, renovate their stores and open stores with new banners and formats resembling Whole Foods Market. Evidently the FTC does not appreciate the many benefits for consumers of the proposed merger, including our plan to invest capital in and improve many of the stores currently owned by Wild Oats.”

Whole Foods and Wild Oats, in that order, are the top two green brands, according to the 2007 ImagePower Green Brands Survey.