WSJ: Federal Judge Halts Sysco-US Foods Merger

Federal Judge Halts Sysco-US Foods Merger

Judge sides with FTC on antitrust challenge to merger of food distributors

A federal judge ruled in favor of the Federal Trade Commission and blocked a merger between Sysco and US Foods on antitrust grounds. WSJ’s Brent Kendall joins Lunch Break with Tanya Rivero. Photo: AP


Brent Kendall And Annie Gasparro

Updated June 23, 2015 9:45 p.m. ET


A federal judge on Tuesday issued a preliminary injunction blocking Sysco Corp.’s planned acquisition of US Foods Inc., a ruling that could kill a deal to combine the nation’s two largest food distributors.

The decision handed a high-profile victory to the Federal Trade Commission, which filed a lawsuit in February challenging the transaction on antitrust grounds. The win is the latest in a string of merger-enforcement matters in which antitrust officials appointed to the FTC and the Justice Department by President Barack Obama have flexed their muscles to block or pare back mergers they believed would harm competition.

The Sysco-US Foods deal, announced in December 2013, sought to combine the food distributors that lead the pack in providing ingredients and a range of other supplies to restaurants, hotels, schools and other food-service operations. The FTC argued the merger would leave customers large and small vulnerable to higher prices and reduced levels of service. The companies argued their tie-up would help them improve service and become more efficient, while cutting hundreds of millions of dollars in costs.

U.S. District Judge Amit Mehta in Washington said the FTC had shown that putting the brakes on the merger was in the public interest.

“The FTC has shown that there is a reasonable probability that the proposed merger will substantially impair competition in the national customer and local broadline markets and that the equities weigh in favor of injunctive relief,” the judge wrote in a two-page order.