February 20, 2015 / 8:30 PM / 4 years ago

Sysco not in talks to settle U.S. lawsuit to stop merger -lawyer

WASHINGTON, Feb 20 (Reuters) - Sysco Corp is not holding settlement talks with the U.S. government to resolve a lawsuit aimed at stopping a $3.5 billion merger of the food distributor and its largest rival, a lawyer for Sysco said on Friday.

The Federal Trade Commission has filed a complaint aimed at blocking Sysco’s purchase of U.S. Foods Inc. The FTC said the deal would give the two companies too much market power, with control of 75 percent of the national market to supply restaurants, hotels and hospital chains with food and other supplies.

Sysco said it would fight the FTC in court, and that no settlement talks were underway.

“Our door is always open if the FTC wants to talk. No, I don’t know if there is a basis for settlement or not,” said Richard Parker, who represents Sysco, on a conference call.

In federal court in Washington, the FTC will ask for a preliminary injunction aimed at preventing the deal from closing, while a slower, internal FTC court tries to determine if the deal complies with antitrust law.

The FTC’s complaint said a combined Sysco-US Foods would have more than 50 percent of sales in 32 local markets. Sysco had agreed to sell assets in eight of those markets, as well as three others, but the FTC rejected this offer as inadequate.

Sysco said the FTC was wrong in its assessment of the local and national markets. “There is no national market. It is pure mythology,” said Parker. “This case will be tried local market by local market. The evidence is going to show that those markets, every one of them, is fiercely competitive.”

The FTC complaint also quoted from heavily redacted documents indicating that Sysco and US Foods watched each other’s prices carefully.

But Sysco’s attorneys dismissed them as irrelevant. “The fact that Sysco and US Foods are head-to-head competitors is no secret and is not the basis for an antitrust challenge,” said Joseph Tringali.

The federal court hearing will likely be set in 60 to 90 days, said Parker, putting it in April or May. (Reporting by Diane Bartz; Editing by Kevin Drawbaugh and David Gregorio)

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