FTC Files Lawsuit Challenging Sysco-US Foods Merger

By Brent Kendall 

WASHINGTON--The Federal Trade Commission on Thursday sued to block Sysco Corp.'s planned acquisition of rival US Foods Inc., a long-awaited move that sets the stage for a major antitrust battle in court.

The FTC, in a 3-2 vote, alleged the proposed tie up of the nation's two largest food distributors would create a dominant national foodservice distributor that could raise prices and reduce service for customers.

The two companies provide food and related supplies to restaurants and other institutions like hospitals and schools. Post-merger, the combined companies were expected to generate more than $65 billion in annual revenue. Sysco and US Foods have said the $3.5 billion merger would allow them to improve service and achieve hundreds of millions of dollars in cost savings.

The commission had been investigating the merger for more than a year. Lengthy settlement talks between the two sides failed to produce an agreement to allow the merger. Sysco recently offered to address FTC concerns about competition by selling off a large package of assets that generate $4.6 billion in annual revenue, far above its original $2 billion divestiture commitment.

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