NEW YORK (The Deal)--The antitrust review of Sysco's (SYY) proposed $8.2 billion purchase of food distribution rival US Foods, already expected to be lengthy, has been delayed getting under way because the Federal Trade Commission and the Department of Justice have not yet decided which agency should review the deal.
"The government has not determined which of the agencies will actually be responsible for reviewing the transaction yet," Sysco CFO Chris Kreidler told attendees at the 16th Annual ICR XChange Conference in Orlando, Fla., Tuesday.
"We don't really understand and don't know who's going to get it. We know they're discussing and we just don't know who's going to be on point," he said.
In most cases, it's clear which agency will review a particular merger because the DOJ and the FTC generally have divided responsibility according the amount of experience each one has in a particular industry. Sometimes, as with the US Foods acquisition, it's not clear which agency has the better claim to expertise.
Although some staff at the FTC had expected to be assigned the deal, neither agency has reviewed a major merger of food distributors.
The DOJ, however, has deep expertise in food and transportation. It's recent deals in the area include last year's merger of Anheuser-Busch InBev (BUD) and Grupo Modelo, Grupo Bimbo's 2011 acquisition of Sara Lee's North American Fresh Bakery business and several mergers of major meat packers.
The FTC's claim to the deal lies in its experience reviewing grocery and retail transactions. Although Sysco and US Foods primarily serve institutional clients, such as restaurants, universities and military installations, rather than grocery stores, the commission has argued that it has developed expertise with institutional clients by handling antitrust reviews for ConAgra Foods' (CAG) 2012 acquisition of the Bertolli and P.F. Chang's Home Menu frozen meal business from Unilever (UL) and Kellogg's (K) 2009 acquisition of Wholesome & Hearty Foods' Gardenburger business.