Published on : May 04, 2015
To prevent their planner merger, the food distribution competitor companies Sysco Corporation and the US Foods Incorporated have to convince a federal judge during the coming two weeks that their industry is much more diverse as opposed to the claims of their antitrust enforcers.
The country’s two largest food distributors along with the FTC (Federal Trade Commission) will face off in a federal court in the Washington state which will begin on Tuesday. This will be a seven day hearing which will carry high stakes for several restaurants, schools, and hotels which rely on the companies for food ingredients along with other supplies.
This FTC filed suit during February to block this merger after scrutinizing it for more than 12 months argued that the deal would as a result destroy vigorous and direct completion from the two companies which the distributors would not be able to replace.
The commission alleges which the US Foods and Syscos held roughly 65 billion dollars in blended annual revenue and hundreds of thousands of consumer would have accounted for 75 per cent of sales to big chain restaurants along with other national consumers and have more than half of the market share in 32 cities which includes around 80 per cent in the Washington area itself.
According to FTC, these consumers face a significant risk of higher prices and decreased service as compared to what they would have been able to receive without the merger.
However, the companies stated that there was no one size which fits all distribution model in the industry of food distribution and that consumers create their own distribution mix via several providers.