FTC Files Lawsuit to Block Sysco and US Foods Merger
HOUSTON, TX – The Federal Trade Commission has filed a lawsuit seeking to block the $8.2 billion Sysco/US Foods merger.
The Wall Street Journal is reporting that the FTC voted 3-2 in favor of the lawsuit, saying that the merger would create a dominant national company that could raise prices and reduce service.
Sysco and US Foods are the only U.S. food distributors with the geographic reach to offer nationwide contracts to deliver food and other supplies to hotel chains, hospitals and fast food restaurants.
“Consumers across the country, and the businesses that serve them, benefit from the healthy competition between Sysco and US Foods, whether they eat at a restaurant, hotel or a hospital,” Debbie Feinstein, head of the FTC’s bureau of competition, said in a statement.
Though Sysco has been in talks with the FTC to circumvent an antitrust lawsuit, Reuters is reporting that the company already secured law firm O’Melveny & Meyers LLP as counsel to fight the potential lawsuit.
Sysco Chief Executive Bill DeLaney said in a statement, “The facts are strongly in our favor, and we look forward to making our case in court. Those of us who work in the industry every day know it is fiercely competitive.”
Before yesterday’s FTC decision, Sysco and US Foods offered to sell 11 distribution centers with $5 billion in sales. The centers would have been sold to Performance Food Group in an attempt to make it a national competitor.
As we have previously reported, the merger has been delayed more than once since the official offer made in December of 2013.
The FTC is planning to try the merger case through its own administrative litigation system and set a trial date of July 21, according to the Wall Street Journal. The commission is also planning on asking a Washington, D.C. federal court to issue a preliminary injunction to block the deal while the case proceeds.
The merger agreement is set to expire in September, but it could be extended if the litigation is not finished by then.
Stay tuned to AndNowUKnow for the latest on this developing story.