WASHINGTON--Federal court proceedings in the government's
antitrust challenge to the proposed merger of rivals Sysco Corp.
and US Foods Inc. are going into overtime.
A planned seven-day hearing in front of U.S. District Judge Amit
Mehta was scheduled to end Wednesday, but will be extended with an
additional hearing day this week and closing arguments at the end
of May. Judge Mehta said he plans to call the Federal Trade
Commission, which sued to block the deal in February, and the
companies back to the courthouse after Memorial Day to present
closing arguments on whether the transaction will harm
competition.
Those proceedings are tentatively scheduled for May 28. The
judge hasn't laid out a time frame for when he might rule and
hasn't given strong signals of which way he is leaning in the
case.
The FTC last week presented evidence it said supported its
position that the merger of the nation's two largest food
distributors will leave restaurants and other food-service
providers facing higher prices and limited distribution choices.
There aren't other food distributors of the same national size and
scope that offer a broad line of products, the FTC argued.
This week's proceedings have been devoted to the companies'
defense, in which executives from Sysco and US Foods argued the
deal would help them cut costs considerably and better serve
customers. The companies also have offered evidence they said
demonstrated the market would remain highly competitive after the
transaction.
The companies wrapped up their case Wednesday with testimony
from a pair of their economic experts who argued the FTC's views of
the marketplace and economic analysis of the merger were flawed.
The commission will offer rebuttal testimony from its own experts
Thursday.
Judge Mehta is considering whether to issue an injunction that
would preliminarily block the companies from closing the deal. The
FTC has announced plans to hold a longer in-house trial on the
merger in July, but the odds of those proceedings taking place
appear low. A US Foods executive this week testified the company
would terminate the Sysco transaction if the judge rules against
the companies and issues a preliminary injunction.
The two sides have debated several issues during the seven days
of testimony, including how the merger would affect large national
customers as well as smaller local food-service businesses. They
have also sparred at length over whether the companies' expected
cost savings from the merger will be passed on to customers through
lower prices, and whether the alleged competitive harms from the
merger can be addressed through the companies' proposed asset
divestitures to the industry's next largest company, Performance
Food Group Inc.
Write to Brent Kendall at brent.kendall@wsj.com
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