Food & Water Watch Slams Sysco-US Foods Merger
01.9.14
Washington, D.C. — In response to the latest news of giant food corporations seeking to further consolidate, Food & Water Watch demanded that the U.S. Federal Trade Commission undertake a thorough and comprehensive analysis of the proposed merger between the two biggest U.S. foodservice distribution firms: Sysco Corp. and US Foods Holding Corp. These companies deliver food to restaurants, schools, hotels and other cafeteria and hospitality establishments.
In a letter sent yesterday to FTC Bureau of Competition Director Deborah Feinstein, Food & Water Watch outlines several antitrust concerns with the proposed corporate union that deserve close scrutiny; requests the agency to oppose the early termination of the antitrust review and urges federal regulators to extend the merger waiting period to thoroughly review the implications of the proposed merger.
“By joining the top two foodservice delivery firms, the post-merger Sysco would have a stranglehold on food distribution in most parts of the country,” said Food & Water Watch Executive Director Wenonah Hauter. “Independent, family-owned restaurants would be vulnerable to Sysco price hikes because there would be few competitors and none would have the reach and capacity of the new mega-Sysco.”
Both Sysco and US Foods have aggressively pursued a string of mergers in recent years, but the proposed merger would be a significantly larger amalgamation of market power than either company’s prior acquisitions, the letter explains. The proposed merger between Sysco and US Foods, announced on Dec. 9, 2013, would significantly erode competition in most states and regions of the country. In many local areas, Sysco would be the overwhelming powerhouse of foodservice delivery.
The letter explains how the post-merger Sysco could have detrimental impacts on foodservice establishments, food manufacturing and potentially reduce consumer welfare. The merger eliminates Sysco’s main rival, which had given many restaurants the ability to shop around for supplies at the best prices and terms. By eliminating this rivalry, many restaurants and cafeterias would be forced to accept whatever prices Sysco offered. Ultimately, this could lead to higher prices for consumers when they go out to eat.
“From beer to beef, frozen food to flour, peanut butter to bacon, the past 12 months have brought a deluge of big food mega-mergers that’s threatening to strip away the few remaining shreds of fair competition that our food and beverage marketplace has left,” Hauter observed. “It’s time that the FTC and DOJ wake up and do their job protecting consumers and fair, healthy markets and stop rubber-stamping these mega-mergers.”
Links for additional background on the problems with consolidation of the food and beverage industry:
Read the report: The Economic Cost of Monopolies
Contact: Anna Ghosh, 510-922-0075, aghosh(at)fwwatch(dot)org
Food & Water Watch champions healthy food and clean water for all. We stand up to corporations that put profits before people, and advocate for a democracy that improves people’s lives and protects our environment.
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