WASHINGTON (The Deal) -- A major union representing workers at Sysco Corp. (SYY) and US Foods said Thursday the merger partners have underestimated the market share the combined company would have if their $8.2 billion combination is cleared by the Federal Trade Commission.
Representatives for the International Brotherhood of Teamsters, which represents 11,500 drivers and warehouse workers for the firms, said in many markets the merged company would have 70% of the market for distributing food to restaurants and institutional clients.
"This merger … will not only result in significant job loss for our members but major operating problems for Sysco and US Foods customers resulting from a virtual market monopoly in every market in the continental U.S.," said Steve P. Vairma, Teamsters International vice president and director of the union's warehouse division.
The Teamsters' estimate surpasses those of many Wall Street analysts and even other antitrust watchdogs that have criticized the deal. The American Antitrust Institute, for instance, has estimated the combined market share to be 54% of the broadline market.
The companies, on the other hand, have said they hold only 25% of the U.S. food distribution market.
The union conceded that it doesn't have the confidential revenue data the companies must submit to help the FTC measure the competitive impact of the deal and instead used surveys of available floor distribution space in the broadline food distribution business and of the number of employees employed by the firms and their competitors as proxies for revenue data. The antitrust lawyer who helped them in the analysis, Baker & Miller PLLC partner and former Department of Justice antitrust chief Don Baker, insisted that even with 5% to 10% divergence from the FTC's measurement, the market concentration measures would generate major concern at the FTC.