Antitrust concerns rise over Sysco deal + rail giants renew merger push
A news briefing from Farm Action’s policy team
Sysco acquisition draws scrutiny over food supply chain consolidation
What happened: Georgia Agriculture Commissioner Tyler Harper is urging federal antitrust regulators to investigate Sysco’s proposed acquisition of Jetro Restaurant Depot, warning it reflects a broader trend of “corporate consolidation in the agriculture industry and food supply chain.” In a letter to the DOJ and FTC, Harper noted that Sysco already controls nearly 20% of the food service market and argued the deal could further concentrate power.
Source: Agri-Pulse, Letter
Why it matters: The call for an antitrust investigation is notable coming from a state agriculture commissioner. This merger would not just impact downstream food businesses, but would also adversely affect the markets farms sell into. Sysco already controls 20% of the food service market. This merger would eliminate a major competition check, positioning Sysco to exert even greater influence over pricing, supplier terms, and market access.
Rail giants take another stab at merger application approval
What happened: Railroads Union Pacific and Norfolk Southern are again seeking approval to merge and become a coast-to-coast railroad company. The companies’ first merger application was rejected earlier this year, due to the Surface Transportation Board’s assessment that the companies lacked necessary materials in their application, including market share projections and documentation including schedules. The revised application includes additional information seeking to address these shortfalls. Union Pacific executives have painted the merger as a way to be more competitive with the trucking industry and lessen shipping costs and delays, but concerns have been raised about potential anticompetitive effects.
Source: Agri-Pulse
Why it matters: For shippers who rely on rail access, approval of the Union Pacific and Norfolk Southern rail merger could result in reduced competition that could create higher costs and fewer service options. Politicians including Republican state attorneys general and state lawmakers have sent letters to the Department of Justice and the Surface Transportation Board urging scrutiny of the first merger application, showing broad concern over its potential impact of lessening competitive pressure and leaving shippers with no viable alternatives. The renewed merger effort underscores the need for continued consideration of concentration in key supply chain sectors and their impacts on shippers, including farmers.