US Sen. Elizabeth Warren is urging federal antitrust regulators to closely examine Sysco Corp.’s proposed $29.1 billion acquisition of Jetro Restaurant Depot, warning that the transaction could weaken competition in the food distribution industry and increase costs for independent restaurants and consumers.
The Massachusetts Democrat raised concerns about the deal as part of a broader challenge to consolidation in the U.S. food industry, according to reporting by The Hill and additional coverage of her letter to the Justice Department and Federal Trade Commission.
Warren’s intervention puts renewed attention on one of the largest proposed transactions in foodservice distribution, a market in which Sysco already holds a leading position.
The acquisition, announced in March, would combine Sysco’s extensive restaurant delivery network with Restaurant Depot’s wholesale warehouse business, which supplies food and other products to independent restaurants and commercial customers.
Warren argues that bringing the two businesses under common ownership could reduce purchasing alternatives for smaller restaurant operators, potentially giving the combined company greater influence over prices and supply arrangements.
The senator’s concerns extend beyond the Sysco transaction. She also called for scrutiny of Kroger Co.’s proposed $1.65 billion acquisition of Giant Eagle and McCormick & Co.’s planned acquisition of Unilever’s food business.
According to a summary of Warren’s letter published by Perishable News, the senator warned that the three transactions collectively reflect a broader trend toward concentration in food retailing, distribution and manufacturing.
Her central concern is that reduced competition across multiple parts of the food supply chain could ultimately translate into higher costs for American households and businesses.
Sysco Sees Expansion Opportunity
For Sysco, the Restaurant Depot acquisition represents an opportunity to expand into a business model that differs from its traditional distribution operations.
Restaurant Depot operates wholesale warehouses where restaurant owners and other foodservice customers can purchase products directly, often without the delivery schedules and minimum-order requirements associated with conventional distributors.
The business operates more than 160 warehouses across 35 states, according to Reuters reporting on the transaction.
Sysco has argued that combining the companies would generate purchasing efficiencies, broaden customer access and create opportunities to offer more competitive pricing.
In an interview with Reuters following the deal’s announcement, Sysco Chief Executive Officer Kevin Hourican expressed confidence in securing regulatory approval, emphasizing the differences between the companies’ operating models and customer bases.
The company has also said Restaurant Depot would operate as a separate business segment following completion of the acquisition.
Read more: Georgia Commissioner Urges Federal Antitrust Review of Sysco-Restaurant Depot Deal
Those distinctions could become central to any antitrust assessment. Regulators will need to consider whether the businesses operate in sufficiently separate markets or compete for enough of the same customers that their combination could materially reduce competition.
Previous Merger Blocked
Sysco’s acquisition plans come with a history of regulatory resistance.
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In 2015, the company abandoned its proposed $3.5 billion purchase of US Foods after a federal judge granted the FTC’s request to block the transaction.
Regulators had argued that combining two major foodservice distributors would substantially reduce competition, particularly for large customers purchasing food and related supplies.
The earlier case could provide a point of reference for scrutiny of the Restaurant Depot acquisition, although differences between the two transactions may affect regulators’ conclusions.
Warren’s latest warning also follows other significant antitrust disputes in the grocery industry, including the FTC’s successful challenge to Kroger’s proposed merger with Albertsons in 2024.
Broader Food Industry Consolidation
The senator’s objections highlight concerns about corporate concentration at several stages of the food supply chain.
Kroger’s proposed acquisition of Giant Eagle has raised questions about competition in geographic markets where the supermarket operators overlap.
Meanwhile, McCormick’s proposed combination with Unilever’s food operations would bring several prominent consumer brands under one corporate owner, potentially affecting competition for grocery shelf space and consumer spending.
Warren has urged federal regulators to evaluate the transactions carefully and challenge any deal found to violate antitrust law.
Her letter does not itself prevent the acquisitions from proceeding. The Justice Department and FTC retain responsibility for determining whether transactions warrant enforcement action under federal competition law.
For Sysco, the regulatory outcome will help determine whether it can proceed with a major expansion into the wholesale warehouse market.
For independent restaurants, the debate centers on whether the combination would deliver the lower purchasing costs promised by Sysco or reduce the competitive alternatives available to smaller businesses.
Source: The Hill
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