States Look To Block Sysco-U.S. Foods Merger

BERLIN — Maryland Attorney General Brian Frosh last week joined the growing battle to prevent a merger of two foodservice distribution giants, including one of the players that has a strong presence in Worcester County.

Frosh last week joined colleagues from nine states and the District of Columbia along with the Federal Trade Commission (FTC) in challenging the proposed merger of Sysco and U.S. Foods, the two largest foodservice distribution companies in the country. The growing battle has local implications because Sysco and U.S. Foods are the major suppliers for many of the restaurants and food service operations in Ocean City and throughout Worcester County. In addition, Sysco Eastern Maryland is based in Pocomoke and employs hundreds in Worcester, although the implications of the merger on the local operation are not known.

The Sysco-U.S. Foods merger is valued at around $8.7 billion. The companies are the two largest foodservice distributors in the U.S. and currently compete with each other to sell and deliver a wide array of goods to restaurants, hotels, hospitals, schools and other facilities.

The FTC last week filed a complaint in U.S. District Court attempting to block the proposed merger, alleging it would reduce competition by creating an entity that would control 75 percent of the national market, including 80 percent of the market in Maryland. Frosh last week joined Attorneys Generals from eight other states in supporting the FTC’s attempt to block the merger.

“Competition in the marketplace benefits consumers by encouraging businesses to provide better and more affordable goods and services,” he said. “This proposed merger would reduce competition and could have a big impact for Marylanders dining out as well as food service providers.”

The complaint filed last week in U.S. District Court seeks an injunction to block Sysco and U.S. Foods from consummating the proposed merger while the FTC’s administrative proceedings are still pending.

Sysco officials are prepared to fight the injunction.

“The facts are strongly in our favor and we look forward to making our case in court,” said Sysco President and CEO Bill DeLaney. “Those of us who work in this industry every day know it is fiercely competitive. Customers of all types have access to food distribution services from a wide variety of companies and any number of channels.”