Sysco’s antitrust battle goes to judge

Houston-based Sysco Corp.’s plan to buy US Foods is in a federal judge’s hands after the food distributor made its final plea to reject a move by antitrust officials to block the deal.

Judge Amit Mehta in Washington heard final arguments Thursday in the Federal Trade Commission’s lawsuit against the companies seeking an order halting their $3.5 billion merger on the grounds that it will raise prices for customers.

“You’ll hear from us as soon as we can get a decision to you,” the judge said after a 3½-hour hearing.

A ruling in favor of the FTC would stop the deal from closing pending an administrative trial seeking a permanent block. Sysco and US Foods have said an order temporarily halting the deal would effectively kill it.

Mehta grilled lawyers from both sides on key elements of the dispute, including how the FTC defined the market in which the two companies compete, their market shares and the ability of competitors to restrain possible efforts to increase prices by the merged company.

The FTC, which sued in February, argues the merger uniting the two largest broadline food distributors would create a combined company dominating the market for service to customers like restaurants, hotels and hospitals.

The judge said that while some customers have the flexibility to find alternative suppliers, there are others that depend on broadline distributors like Sysco and US Foods and switching to regional suppliers would be costly.

“Why should that group of customers incur the costs” of shifting? he asked.

Sysco and US Foods, based in Rosemont, Ill., counter that the FTC’s case depends on a “contrived market definition” that ignores many other competitors that will give customers alternatives.