Controversial Sysco-US Foods Merger Blocked by Judge
WASHINGTON, D.C. — On Tuesday, a court temporarily blocked Sysco Corp. from buying US Foods, a deal opposing regulators say would reduce competition between food supply companies.
In his ruling, Judge Amit Mehta for the U.S. District Court for the District of Columbia granted an injunction blocking the companies from merging until legal proceedings are resolved, reported The Associated Press. The Federal Trade Commission (FTC) showed that a delay is in the public interest because the $3.5-billion acquisition could reduce competition, the judge said.
Sysco expressed disappointment over the ruling and said it will review the decision and consider its options — among them, pulling the plug on the purchase, the news outlet reported.
The FTC said it looks forward to proving its case at trial, adding that the deal would likely lead to higher prices for the companies’ customers, which include convenience stores, restaurants, hospitals, hotels and schools.
Sysco announced its plan to buy US Foods in December 2013, as CSNews Online previously reported.
The companies need the FTC’s approval to close the deal. The agency filed a complaint to stop the sale in February, noting Sysco and US Foods are the industry’s largest companies.
Sysco and US Foods agreed to sell 11 food distribution centers in order to address concerns from the agency, but the FTC still wasn’t satisfied, the AP reported. The agency said the buyer, Performance Food Group, wouldn’t be big enough to offer significant competition.
Rosemont, Ill.-based US Foods has more than 60 locations nationwide and offers more than 350,000 products to independent and multi-unit restaurants, health care and hospitality entities, government and educational institutions.
Houston-based Sysco operates 193 distribution facilities and sells, markets and distributes food products to restaurants, retailers, health care and educational facilities.