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Sysco tries to swallow up US Foods

Tim Fitzsimons Feb 20, 2015
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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.

 

 

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