In a courtroom battle, a U.S. lawyer stated that SYSCO Corporation (NYSE:SYY)’s takeover of US Foods Inc. would result in a gigantic entity with a monopoly in the industry. It will eliminate intense competition between the firms. However, the company urged the judge to save the takeover deal in antitrust battle.
The FTC is demanding to block the $3.5 billion merger, arguing that it would give Sysco a large market share in an industry where it is already a biggest player. As a result, it would lead to higher prices for school cafeterias, restaurants, hotels, and other customers. US Foods and Sysco dominate their peers and their merger will hamper competition in several markets. These were the opening statements of the FTC attorney, Stephen Weissman.
Amit Mehta, a U.S. District Judge is hearing arguments in the case started after FTC’s request to stop the merger. It is pending for an administrative process before the FTC’s in-house court. The two companies believe that delaying the merger deal will kill it. As per the report, the hearing is set to last for maximum seven days.
SYSCO Corporation (NYSE:SYY) and US Foods stated that the industry is extremely competitive and offers several options to customers. The FTC claimed that the combined entity would possess a 75% market share, stating food distribution as a sprawling industry. The people are competing aggressively and antitrust regulations are for encouraging competition, and it is what exactly they are doing.
The FTC sued US Foods and Sysco in February after rejecting their offer to solve antitrust issues by selling eleven facilities to Performance Food Group Co. The group believes that the proposed deal would only remove competition between the two distributors. It is an important case as the Justice Department and the FTC hardly sue to halt mergers.
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