Federal Trade Commission Files Lawsuit to Block Major Merger Between Sysco and US Foods

The proposed merger would make Sysco Corp too powerful, the FTC has alleged

Photo Sasabune Omakase Modified: Flickr/erin/CC 4.0

The commission, which has long been wary of the merger, aims to protect the countless hospitality and service industries that rely on major food distributors. 

On Thursday, February 19, the United States Federal Trade Commission filed a lawsuit to block the proposed merger between Sysco Corporation and US Foods, the nation’s largest food distributors, reports The Wall Street Journal.

As we've previously reported, the deal would leave the third largest competitor in the country, Performance Food Group, with less than 10 percent of the food distribution market, a multi-million dollar industry.

In a 3–2 vote, the FTC alleged that the merger would create a national company that was entirely too powerful, and that could simultaneously raise prices and reduce services for a number of dependent industries — including hospitals and medical centers, restaurants, schools, and the military — that require foodservice providers.

“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 written statement.

In response, Sysco’s chief executive Bill Delaney announced that the company planned to fight the lawsuit.

“The facts are strongly in our favor, and we look forward to making our case in court,” said Delaney. 

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