Sysco Corp. Upset that FTC Blocked Merger with U.S. Foods
The Federal Trade Commission (FTC) put measures in place to block a merger between Sysco Corp. and U.S. Foods. However, Sysco filed a memorandum showing their opposition to the FTC motion. A hearing takes place on May 5, where a Federal District Court will hear from both the FTC and Sysco. Sysco is upset about the FTC’s block and will try to make their case that the merger actually evens out competition in the food distribution industry.
There are several things that Sysco plans to argue during the hearing. The first point is that there is not currently a broadline food distribution service for customers in the U.S and competition would still remain even. Currently, customers can choose from a variety of distribution services, including cash-and-carry and specialty distributors. The FTC argued that the Sysco U.S. Foods merger could drastically skew some competitive markets, citing that they would have 100 percent market share in San Diego. Sysco argues this simply isn’t true.
Another important point that Sysco intends to make during the hearing is that the merger will allow the combined company to become more efficient, saving as much as $600 million. This would allow them to reduce customer prices; not raise them due to monopoly conditions. They argue that the merger would make the food distribution market even more competitive.
Sysco’s President, Bill DeLaney, said, “We look forward to presenting all of the facts in court and ultimately, through this merger, delivering better service at a lower cost through a more efficient, innovative, and competitive combined company.” However, the FTC did not place the block on the merger haphazardly; they are just doing their part to ensure that no company gets so large that others cannot compete. Competition is essential in keeping costs low for customers and strengthening the U.S. economy.
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