The Law Office of Lynnette Ariathurai A Professional Corporation

Sysco faces FTC challenge in proposed business merger

Much of business is about resources. The more access to useful resources a California company has, the more profitable it can become. This is why some companies consider merging with other business entities. It was recently reported that Sysco is seeking to complete a business merger with USA Foods.

Sysco has recently run into some challenges during the process of completing the proposed merger. After the Federal Trade Commission reviewed the proposal, the agency decided to file a lawsuit aimed at stopping the merger from moving forward. The agency had taken over a year to review the proposal before the regulators decided to initiate a formal challenge in court.

Sysco and USA Foods are currently the two largest players in the national food distribution market. This is the reason why regulators became concerned that the merger would hurt competition in the marketplace. Sysco attempted to appease these concerns by offering to make significant divestitures. The company also argued that there is still plenty of competition in the market and that the FTC's definition of the market is narrow and inaccurate.

The food distribution giant will now have to defend its position in a court of law. The outcome of the legal proceedings will depend upon the decision of the judge presiding over the case. Clearly, the proposed business merger could significantly change the food distribution market in California and nationwide. However, in order to pass the final hurdle, Sysco will have to present a formidable response to the proof offered by the federal government. All of the significant players in the national food distribution market will surely follow the progress of the litigation.

Source: Houston Chronicle, "Sysco to make its case for merger to judge this week", Sarah Scully, May 1, 2015

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