FTC Moves to Block Sysco, US Foods Merger on Antitrust Grounds

Sysco proposed to takeover rival food distributor US Foods back in December 2013. The deal was always a controversial one because they are the only two big food distributors who can offer broad line nationwide contracts. The headline today is that the U.S. government has filed a lawsuit seeking to block the deal on antitrust grounds. The FTC filed an official complaint Thursday. And it said the following: The merger would create an entity that has 75 percent marketshare. It would hurt competition, not only between the two, but among local food distributors. Foodservice customers, including restaurants, hospitals, hotels, and schools, would likely face higher prices and diminished service. Sysco says it plans to fight the regulators in court. Bill DeLaney, president and CEO of Sysco, acknowledged the competitive environment but said the merger still makes sense. He said it won’t hurt local mom and pop shops since most restaurants and food operators choose their foodservice distributor locally anyway. Its already offered to divest some 11 facilities as a concession to make the merger happen. The government says its not good enough. The FTC authorized its staff to seek a court order temporarily blocking the merger.