Support our non-partisan non-profit newsroom 💜 Donate now

Sysco tries to swallow up US Foods

Tim Fitzsimons Feb 20, 2015
HTML EMBED:
COPY

Sysco tries to swallow up US Foods

Tim Fitzsimons Feb 20, 2015
HTML EMBED:
COPY

The Sysco truck is everywhere, unloading in front of restaurants, schools, hospitals and colleges. Packed inside are boxes of seafood, beef, chicken, baked goods and napkins. They are biggest distributor of foods in the U.S., and now, they’re ready to merge with US Foods.

But, the Federal Trade Commission filed a lawsuit to stop the merger.

Before you consider whether Sysco’s proposed merger would violate antitrust laws, you have to understand what Sysco does. As a food distribution company, it is really good at logistics and their deliveries come with few hassles. Say you’re a mom-and-pop sandwich shop, you don’t want to think too much about how much the tomatoes in your BLT cost, or whether the tomatoes will arrive on time.

Then again, imagine you are a gourmet restaurant and want vine-ripened heirloom tomatoes to toss with your fair-trade arugula salad, you might find yourself looking elsewhere.

“Sysco is considered the Chevrolet of the industry,” says Andrew Wolf, an analyst with BB&T. “And a lot of these chefs, especially the very high-end, they’re looking for products closer to a Ferrari.”

So whether Sysco, in its merged form, would dominate the “broad line” food distribution market isn’t really up for debate. The question is: What’s a market, and who gets to decide?

As for this one, the courts will get the final say.

 

 

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.