Sysco Slams the FTC's Concealment of Evidence In US Foods Merger Fight

Thu. March 19th, 2015 - by Jessica Donnel

NEW YORK, NY - Sysco Corp. and US Foods Inc. are continuing their fight to get the Federal Trade Commission to reveal the 92 declarants who contributed to the agency’s suit against their planned $3.5 billion merger. Sysco and US Foods filed a motion in a Washington, D.C. federal district court on March 6 asking the judge to publicize the names, which the FTC quickly opposed.

“Now that plaintiffs have emerged from their ex parte investigation and chosen to make the declarations an element of their case, they should not be permitted to hide this evidence and further impede Sysco and US Foods’ defense,” said the defendants’ in their supporting reply brief.

According to Law360, making the names public is particularly important following FTC’s requested expedited fact discovery, Sysco and US Foods say.

“Defendants are left to build their defense in the dark,” the Sysco/US Foods brief continues. “If [the FTC and several state plaintiffs] want the court to consider witness testimony, then defendants must have a meaningful opportunity to cross-examine those witnesses.” 

Sysco and US Foods first rejected the FTC’s bid to keep the declarants secret earlier this month. The companies countered by saying the identities are "basic information" that should be public. According to the news website, JD Supra, the problem is that many of the declarants only testified because they assumed their identities would be protected, the FTC says.

“Relying on these confidentiality protections, many third parties — broadline food service distributors, customers and others — agreed to participate openly and candidly in plaintiffs’ investigation,” the FTC said. “Third parties, particularly defendants’ customers, were often nervous about participating because they feared retaliation if defendants learned that they had complained about the proposed merger.” 

Sysco and US Foods countered by saying this is merely a ploy to delay the proceedings.

"Plaintiffs’ purported retaliation concern is belied by their recognition that the identities of declarants will eventually become public at the hearing and in the court’s decision in this case,” they said. “This admission suggests plaintiffs merely seek to delay disclosure until after defendants have missed their opportunity to conduct meaningful cross-examinations of declarants and to prepare for trial.”

As we've previously reported, Sysco has informed US Foods that it has extended the termination date for the deal by 60 days, from March 8 to May 7. Hearings in the case are currently scheduled to begin on May 5.


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