Sysco-US Foods Merger More Trick Than Treat

Last December, Sysco, the United States’ largest food distribution company, announced it wanted to buy its largest competitor, US Foods. These two firms are really the only national chains that deliver food to restaurants, cafeterias, stadiums, hotels, nursing homes and other foodservice locations. The deal would give Sysco unbelievable dominance in foodservice delivery that would ultimately drive up prices for consumers and reduce the prices farmers receive.

Food & Water Watch called on federal antitrust regulators to block the mega-merger back in January, but the Federal Trade Commission has taken nearly eleven months to decide what to do. Recently, the FTC’s wall of silence began to melt and there are now inklings that the antitrust agency will decide whether or not to block the merger by the end of the month. Will it be a Halloween with a spooky antitrust enforcement surprise?

Federal regulators are trying to see whether Sysco would sell enough warehouses and distribution centers to make sure that the post-merger Sysco cannot run roughshod over its rivals and price gouge restaurants, cafeterias and ultimately, consumers. Sysco and US Foods are already so much bigger than their regional rivals, that it would be hard for these firms to either buy many warehouses or step up to provide real competition to the new, even bigger Sysco.

Recently, the leaders of the Senate Antitrust Subcommittee, Chairwoman Amy Klobuchar (D-Minnesota) and Ranking Member Mike Lee (R-Utah), sent a letter to the FTC that raised concerns about whether these rivals could viably compete against the behemoth, post-merger Sysco. Hopefully, the FTC will heed the Senators’ warning and file suit to block this merger, because another mega-merger would be really scary for consumers.