Sysco Meets With FTC Over Foodservice Voltron Proposal

Image courtesy of (Don Buciak II)

Way back in 2013, we shared the news that Sysco, the country’s biggest supplier to restaurants and other food-service facilities, wanted to acquire its next-biggest competitor, US Foods. Yet the Federal Trade Commission still hasn’t come to a decision about that proposal. FTC officials don’t agree on the question of whether Sysco plans to sell enough of its business to make sure the restaurant supply business stays competitive.

Even if you’ve never heard of either of these companies, you have almost certainly used their products before: they supply establishments that range from humble cafeterias to fancy restaurants. It’s that reach that the FTC is concerned with. Sysco proposed the sale of 11 of its distribution centers to another competitor, and inside sources tell the Wall Street Journal that FTC staff remain divided: some believe that selling some centers will be enough, and others disagree. With only one major supplier, all of those food-serving businesses would be stuck without any competitors to go to if USyscoFoods raised prices.

The FTC still hasn’t reached a final conclusion whether to approve the merger or block it due to antitrust concerns. This week, Sysco representatives visited the FTC to discuss the commission’s concerns. If combined, the new company would have something like 25% of the commercial food supply market––perhaps a bit less if Sysco is forced to sell additional distribution centers so the deal will go through.

Sysco Meets With FTC Commissioners in Effort to Allay Antitrust Concerns [Wall Street Journal]