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US Foods, Sysco must decrease gap with rival to clear merger

US Foods, Sysco must decrease gap with rival to clear merger

WASHINGTON: US Foods Incorporation and Sysco Corporation proposed merger hinges on the top two US food companies helping to turn a far smaller rival into a national player to ease antitrust concerns, but the gap may be too big.

US Foods  and Sysco are only two companies with national distribution to hospitals, restaurants and schools have been discussing the sale of assets such as distribution centers to No. 3 Performance Food Group. Many of those centers are in the western United States, where Performance has little or no presence.

Sysco offers about 400,000 different food service items, and US Foods has 350,000, while PFG has 150,000. The gap in product offerings makes a major difference to restaurant managers and chefs.

Further the Federal Trade Commission is still reviewing the $3.5 billion deal announced one year ago. But non geographic gaps cannot be addressed through the divestitures.

Andre Barlow of Doyle said that seems like a big discrepancy, Barlow and Mazard PLLC, pointing to the companies’ products, itemized as stock keeping units (SKUs). If you want to restore that lost competition, you want someone to also provide those SKUs.

Brenda Langton co-owner of Spoonriver restaurant in Minneapolis would prefer to work with a smaller supplier but uses US Foods because only the two largest ones have the particular tuna needed for her menu.