UPDATE 2-CEO's comments raised at Whole Foods hearing

(Recasts with testimony by Whole Foods economist)

By Peter Kaplan

WASHINGTON, July 31 (Reuters) - An economist for Whole Foods Market Inc WFMI.O was forced on Tuesday to grapple with the past comments of the company's chief executive as he testified against government efforts to block the acquisition of Wild Oats Markets Inc OATS.O.

Whole Foods economist David Scheffman was asked how he could square his benign view of the merger with the statements of Whole Foods CEO John Mackey, who told the company's board of directors in an e-mail the deal would prevent "nasty" price wars with Wild Oats and head off future competition with conventional supermarket chains.

"If you assume Mr. Mackey is right, doesn't your conclusion have to be wrong?" Federal Trade Commission lawyer Matt Reilly asked Scheffman.

"I seriously considered this. I treated it seriously," Scheffman responded. But he said economic data showed the deal would not hobble competition among organic grocers, as the government claims.

Scheffman's testimony came on the first day of a two-day hearing in which the FTC is seeking to persuade U.S. District Judge Paul Friedman to block Whole Foods' proposed $565 million purchase of Wild Oats.

The government says the merger would reduce competition and raise prices for consumers, but the companies argue that they already face fierce competition from traditional supermarkets.

Scheffman said Whole Foods and Wild Oats stores compete with regular supermarkets, with many customers shopping at both organic and conventional markets. But Friedman questioned whether that really made them competitors, unless they were buying the same products at the different stores.