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Attorney General Mike DeWine
Ohio Joins
Challenge of Sysco and US Foods Merger
FTC, States Cite Competition and Cost Concerns over Proposed Merger of
Two Largest Food Distributors
(COLUMBUS, Ohio)—Ohio Attorney General Mike DeWine today announced that
his office has joined the Federal Trade Commission and the attorneys
general of nine other states and the District of Columbia in
challenging the proposed merger of Sysco and US Foods — the nation’s
two largest food distributors.
In a complaint filed today to block the merger, the FTC and attorneys
general cite antitrust concerns, saying that if the merger goes forward
as proposed, foodservice customers, including restaurants, hospitals,
hotels, and schools, would likely face higher prices and diminished
service.
“If an industry’s top two competitors merge, it reduces competition and
creates the potential for higher prices in that industry,” Attorney
General DeWine said. “We don’t want institutions like schools,
hospitals, and restaurants to have fewer food delivery options which
would lead to higher prices.”
Foodservice distribution companies like Sysco and US Foods deliver food
products to restaurants, bars, taverns, supermarkets, chain stores,
hotels, schools, hospitals, military facilities, corrections
facilities, and other institutions.
Sysco and US Foods are the number one and number two food service
distribution companies in the United States. They also are considered
broadline distributors, meaning they carry a large range of products to
a wide variety of customers. In some parts of the country (though not
in Ohio) Sysco and/or US Foods are the only available broadline
distributors.
According to the FTC’s complaint, a combined Sysco/US Foods would
account for 75 percent of the national market for broadline
distribution services.
Sysco and US Foods announced their plans to merge on Dec. 9, 2013.
In response, the Federal Trade Commission, Ohio, and several other
states conducted a year-long investigation to determine how the merger
would impact competition in the foodservice industry and affect
manufacturers, business owners, and consumers.
The agencies determined that the merger would substantially reduce
competition in the industry, opening the door for higher prices and
fewer or no options for restaurants and other customers of foodservice
distributors.
Today’s complaint, filed in the US District Court for the District of
Columbia, seeks a preliminary injunction to stop the transaction,
pending the outcome of a related FTC administration action.
Joining the FTC in its federal court action to stop the merger are the
attorneys general of Ohio, California, the District of Columbia,
Illinois, Iowa, Maryland, Minnesota, Nebraska, Pennsylvania, Tennessee,
and Virginia.
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