FTC May Block Planned Sysco And U.S. Foods Merger

(Don Buciak II)

Last December, we shared the news that commercial food suppliers U.S. Foods and Sysco were planning a merger, which would put about a quarter of the country’s entire foodservice-supply business in the hands of one company. The merger hasn’t yet gone through, and the Federal Trade Commission is considering a federal antitrust lawsuit to stop it.

How would this be a monopoly when the combined company would have thousands of competitors? The problem, according to the Wall Street Journal, is that those competitors are mostly very tiny and local vendors. If the two companies joined to form a foodservice Voltron, the next-biggest competitor would be maybe one-fifth the size of the hypothetical USyscoFoods.

Of course, the FTC and U.S. Department of Justice can, at least require the companies to make pre-merger changes if the deal is to be approved. For example, they could require both companies to sell off their business in certain sectors. For example, if those companies currently compete for all of the food biz in a certain city, one of them could be forced to sell that business to a competitor.

FTC Considers Challenge to Food Merger [Wall Street Journal]

by Laura Northrup via Consumerist