HARRISBURG – Attorney General Kathleen G. Kane today announced that she has joined 10 other attorneys general and the Federal Trade Commission in an effort to block the proposed merger of Sysco and US Foods, arguing that the move would significantly decrease competition in the broadline food service industry nationwide.
A complaint filed in the U.S. District Court for the District of Columbia alleges that the merger violates antitrust laws and if the merger moves forward, customers would likely face higher prices and diminished service.
Sysco and US Foods both store, sell and deliver a broad line of food and products to restaurants, hospitals and school cafeterias. The two competitors are the only broadline foodservice distributors with nationwide networks of distribution centers.
In Pennsylvania, Sysco and US Foods control 84 percent of broadline foodservice distribution in Philadelphia, 72 percent in Central Pennsylvania and 64 percent in Pittsburgh.
“Restaurants, hotels, schools and hospitals depend on competition among foodservice providers to maintain low prices and high-quality customer service,” Attorney General Kane said. “Without the benefits of such competition, the Commonwealth’s small businesses, and ultimately, consumers, may suffer. Consumers deserve the benefits that a competitive marketplace provides.”
Currently, Texas-based Sysco and Illinois-based US Foods compete vigorously for business, with many hotel chains, foodservice management companies and group purchasing organizations considering the two to be each other’s closest competitors.
The complaint maintains that the proposed sale of 11 US Foods distribution centers across the country to Performance Food Group (PFG) would neither enable PFG to replace US Foods as a competitor nor counteract the significant competitive harm caused by the merger.
In the complaint, Kane asks the court to issue a preliminary injunction that puts the merger on hold until the case is decided by an FTC administrative law judge and any appeals process is concluded.
California, Illinois, Iowa, Maryland, Minnesota, Nebraska, Ohio, Virginia, Tennessee and the District of Columbia joined Pennsylvania and the FTC in the complaint.
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Media contact: OAG Press Office, 717-787-5211, [email protected]