ATLANTA — Two American food supply companies are now a source of concern for Georgia’s top farming official.
Georgia Agriculture Commissioner Tyler Harper wants the U.S. Department of Justice and the Federal Trade Commission to investigate Sysco and Restaurant Depot in an anti-trust action over their potential merger.
Harper wrote a letter to federal officials highlighting his “significant concerns over Sysco’s growing market share, increasing consolidation in America’s food supply chain, rising costs for American consumers and the involvement of private equity firms.”
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The merger was announced by Sysco at the end of March.
Harper said the merger is an example of a “troubling trend of corporate consolidation in the agriculture industry and food supply chain.”
He said mergers like the one proposed between Sysco and Restaurant Depot “squeeze American farmers” and limit options for supply chain services.
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“This proposed acquisition will dramatically reshape America’s food supply chain, making it more fragile and increasing costs on American restaurant operators and their customers,” Harper said in a statement. “American consumers cannot absorb another price shock in our food supply chain.”
According to the Agriculture Department, “decades of mergers” have had large impacts on farming and the supply chain across the United States.
As examples, the department said:
- 4 largest equipment manufacturers control 51% of market
- 4 largest US meatpackers control 85% of market
- 7 retailers control 70% of crop input, sale services
- 4 companies control 62% of agrichemical market
- 2 companies control 90% of American corn, soybean and cotton trait acres and cotton seed genetics
In his letter to federal officials, Harper said Sysco alone controlled almost 20% of the food service market, even before the proposed merger.
Harper said he was also concerned with the role private equity companies are playing in the merger.
While Sysco is a publicly traded company, its largest shareholders include BlackRock and Vanguard, both of which are private equity firms. Restaurant Depot is privately owned, according to state officials.
Harper also cited the impact of private equity on the American housing market as cause for concern over the impacts to the agriculture and supply chain industries, if the merger happens.
“America’s food supply chain is an essential part of our nation’s national security, it is not a profit center for private equity firms to maximize,” Harper stated.
Sysco shared a statement with Channel 2 Action News about the merger.
“Upon closing, Jetro Restaurant Depot will operate as a standalone business segment within Sysco. Sysco will not raise prices at Restaurant Depot and plans to expand its value‑focused offering by opening more than 125 new Restaurant Depot warehouses in key markets nationwide, creating thousands of jobs.
The transaction will also give smaller operators access to a broader assortment of products by making certain Sysco products available through Restaurant Depot stores. Together, the companies—already significant purchasers of locally sourced products—will be able to expand the reach of tens of thousands of local farmers and producers by bringing their products to a wider customer base.
The combination will increase access and affordability for customers nationwide, while preserving competition. As recognized by the Federal Trade Commission and federal court in 2015, broadline and cash‑and‑carry distributors operate in distinct markets serving different customer needs, a dynamic that will remain unchanged and highly competitive following the transaction."
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