Dive Brief:
- The food distribution marketplace will play a key role in the fate of the $3.5 billion merger between Sysco and US Foods, says the federal judge overseeing this week's hearing between the two companies and the FTC. The FTC is looking to block the merger.
- In its opening statement, the FTC described the merger as being a hindrance to competition in the food distribution market.
- The judge was active during the opening statements, posing questions and making statements several times to both sides to explain the thoughts behind his decision-making process in the hearing.
Dive Insight:
Lawyers for the FTC performed a rigorous investigation and have concluded that the merger could harm both large and small distributors in a number of markets. Lawyers for the two companies retorted, saying that customers would simply turn to other distributors if the combined companies were to raise prices.
In response, the judge pointed out that he would have to determine the differences between various food supply distribution methods as well as factor in wholesale retail outlets like Restaurant Depot to make his decision. This decision would not technically be the end of the merger discussion, but many feel this hearing will likely spell out the merger's future.