Dive Brief:
- A US Foods Inc. executive said in federal court that the company would abandon its potential deal with Sysco Corp. if the judge presiding over the case issues a preliminary injunction to block the merger.
- The executive told the judge that "his company isn’t willing to endure additional lengthy periods of uncertainty about its business while engaging in a protracted legal fight with U.S. antitrust enforcers," The Wall Street Journal reported.
- The case has been brought up against the two companies by the FTC, which believes the merger would give the combined entity unfair competitive advantages in certain food service distribution markets and could give rise to higher prices.
Dive Insight:
According to The Wall Street Journal, Sysco CEO Bill DeLaney told the judge that raising prices on its customers "would be a very stupid thing to contemplate." He believes that the merger would create a company that would still compete fairly with the amount of companies and competition that has built up in the food service distribution industry.
DeLaney also said that by significantly cutting costs as a result of the merger, the company would operate more effectively in the distribution marketplace, not take it over. The hearings continue as the judge has even more pressure now to decide the ultimate fate of this merger.