Consumers Score Huge Victory as Federal Judge Blocks Sysco and US Foods Merger
June 25, 2015
In a stunning victory for people, independent restaurants and public cafeterias, a federal judge struck down the proposed merger of Sysco and US Foods, the only two national food distribution companies in the United States. Food & Water Watch, a non-profit consumer advocacy group, opposed this merger when it was announced nearly two years ago.
<p class="p1">Sysco and US Foods are the only companies that provide national distribution networks to foodservice customers such as schools, restaurants and hospitals. If the merger had gone through, these establishments would have had essentially only one supplier, and the merged company could have raised prices with impunity. Ultimately, you and I would have paid the price for this merger. Thankfully, the Federal Trade Commission prevailed in its <span class="s1"><a href="http://www.foodandwaterwatch.org/pressreleases/food-water-watch-commends-ftc-action-to-block-sysco-us-foods-merger/">suit to block the merger</a></span> and there will still be some resemblance of competition in this market.</p><p class="p1">The February FTC lawsuit argued that if the proposed merger went through it would <a href="http://www.reuters.com/article/2015/06/23/us-usfoods-m-a-sysco-idUSKBN0P32GM20150623"><span class="s1">substantially increase prices</span></a> for customers, and the judge agreed. The merged company would have controlled three quarters of the national food service distribution market and have a stranglehold over the entire industry. This ruling is likely to have put a complete stop to the merger, and although Sysco is looking at other options it recognizes it may have to terminate the <span class="s1"><a href="http://investors.sysco.com/press-releases/Press-Release-Details/2015/Sysco-Responds-to-District-Courts-Ruling-on-Merger-With-US-Foods/default.aspx">merger agreement</a></span>.</p><p class="p1">Although the court blocked the merger, those that stood up to the proposed merger may face retribution from Sysco down the road. During the court proceedings, Sysco requested and subsequently <span class="s1">received the <a href="http://www.meatpoultry.com/articles/news_home/Business/2015/03/Sysco_US_Foods_Show_us_the_wit.aspx?ID=%7B08DABA35-2A3E-4D38-908E-156EBB43284D%7D&cck=1">witness list</a> of the people and organizations that opposed the merger</span>, including customers, competitors and even its own employees. In a highly disappointing ruling, the judge granted the request, despite the high likelihood that Sysco would use this information to retaliate against its customers and competitors for speaking out against the merger.</p><p class="p1">The Federal Trade Commission must now monitor Sysco’s treatment of those that stepped up and provided the agency crucial information in its antitrust investigation. The federal antitrust authorities must establish an ironclad guarantee of anonymity for those that provide evidence in merger cases, especially the rumored Monsanto-Syngneta deal. Otherwise the antitrust witness list can easily become a retaliatory blacklist.</p>
Keep reading...
Show less
