Late afternoon yesterday, federal judge Paul Friedman rejected the Federal Trade Commission's request to block Whole Foods Market Inc.'s (NASDAQ: WFMI) proposed acquisition of Wild Oats Markets Inc. (NASDAQ: OATS).

The FTC had argued that the half-billion dollar deal would stifle competition in the already niche organic foods sector, but Whole Foods countered that their true competition is now general supermarkets which have increased their organic products offerings.

Chairman and CEO of Whole Foods John Mackey said in a statement, "The District Court's ruling affirms our belief that a merger between Whole Foods and Wild Oats is a winning scenario for all stakeholders. We believe the synergies gained from this combination will create long-term value for customers, vendors and shareholders as well as exciting opportunities for team members."

The FTC can still try to block the deal by seeking a stay from the U.S. Court of Appeals for the District of Columbia Circuit or the district court, though all FTC Competition Director Jeffrey Schmidt would say is "we are reviewing our options."

In the meantime, Wild Oats shares are up nearly 18% to $17.90 and Whole Foods shares are up almost 5% to $43.22.

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