Sysco Hires Lawyers for Possible FTC Suit on US Foods Merger
Company signaled willingness to offer concessions to reach settlement but talks haven’t been rekindled
Sysco Corp. in recent days has hired former top Federal Trade Commission officials who now work at the law firm O’Melveny & Myers to serve as the company’s new lead counsel in its attempt to buy US Foods Inc. PHOTO: ASSOCIATED PRESS
Sysco Corp. is bringing in new legal firepower to gird for a potential court battle with the Federal Trade Commission over the company’s planned acquisition of rival food distributor US Foods Inc.
Sysco’s move to add top antitrust lawyers comes after the company concluded a series of meetings with the FTC’s five commissioners last Wednesday. Sysco is trying to convince the commissioners—three Democrats and two Republicans—not to follow the advice of FTC staffers who want to sue to challenge the merger. The proposed deal would combine the nation’s two largest companies that distribute food and related supplies to restaurants, cafeterias and other food-service institutions.
Sysco signaled in last week’s meetings a willingness to offer additional concessions to reach a settlement. But settlement talks haven’t been rekindled, a sign the FTC could be gearing up for a lawsuit, according to people familiar with the matter.
Sysco in recent days hired former top FTC officials who now work at the law firm O’Melveny & Myers to serve as the company’s new lead counsel. The chair of O’Melveny’s antitrust practice is Richard Parker, one of the nation’s most prominent antitrust lawyers. Mr. Parker, a seasoned litigator, served as director of the FTC’s competition bureau from 1999-2001.
Companies seeking government clearance for mergers have a history of turning to Mr. Parker when facing resistance from antitrust enforcers. For example, US Airways brought in Mr. Parker in 2013 when the Justice Department was challenging its merger with American Airlines ’ then parent AMR Corp. The department ultimately agreed to settle the case, allowing the airlines to merge.
Sysco’s legal team also now includes O’Melveny’s Edward Hassi, who served as the FTC’s chief trial counsel from 2011 until last summer. He returned to private practice in August.
The lawyers confirmed they are working for Sysco, alongside other antitrust lawyers from Wachtell, Lipton, Rosen & Katz.
A Sysco spokesman declined to comment.
The FTC has been examining the proposed Sysco-US Foods deal for more than a year. The Wall Street Journal previously reported FTC competition staffers are concerned the merger would suppress competition and lead to higher prices. The companies say the deal will allow them to cut costs and improve service. They have offered to address competition concerns by divesting assets that account for about $4.6 billion in annual revenue. Postmerger, the companies are expected to have combined annual sales of more than $65 billion.
The FTC hasn’t yet made a final decision on whether to challenge the deal. An FTC spokesman declined to comment.
