Dive Brief:
- The plan Sysco and US Foods devised to smooth over their potential merger with regulators has been met with skepticism by an array of groups who would be affected by the merger.
- This plan included Sysco divesting 11 locations as part of selling $5 billion in assets to appease regulators, which would bring Sysco's broadline facilities after the merger to 159. Following Performance Food Group's proposed acquisition of those 11 locations, the company would still only have 35, making it a distant second-place industry competitor.
- Consumer advocates have stated fears that this merger would overthrow competition "in many regions, states and metropolitan areas (where Sysco and US Foods) are the primary rivals for this market," says Food and Water Watch. This could unfairly reduce competition in the foodservice distribution market.
Dive Insight:
Steven P. Vairma, Teamster Warehouse Division Director commented on the proposed divestiture, "On its face, the proposed fix seems unlikely to do much to reduce Sysco's dominance following the acquisition of US Foods. Even if the proposal included a few more facilities, it would still be a deeply risky experiment, one that could cost consumers and workers dearly."