Sysco Corp. Abandons $3.5 Billion Merger with US Foods Inc.
On June 29, 2015, Sysco Corp.
announced that it was pulling the plug on its $3.5 billion proposed merger
with US Foods Inc. The news comes less than a week after a Washington, D.C.,
federal judge concluded that the Federal Trade Commission (FTC) likely could
prove that the merger would thwart competition. In February, the FTC sued to
block the transaction, citing as the key issue the fact that the two companies
were the top broadline food distributors in the country and the only two players
capable of servicing customers that operate nationwide. Sysco and US Foods
argued a different market definition that would have included a host of other
types of food suppliers. Regardless, when the D.C. federal judge granted the
FTC’s preliminary injunction to block the deal, the parties dismantled the
merger. Sysco will have to pay US Foods a $300 million breakup fee.
U.S. Supreme Court Declines Reviewing Reach of the Foreign Trade Antitrust
On June 15, 2015, the U.S. Supreme Court declined to review a pair of
petitions addressing the reach of the Foreign Trade Antitrust Improvements Act (FTAIA).
Before the court were Motorola Mobility LLC’s damages case against electronics
makers and AU Optronics Corporation’s bid to overturn a $500 million criminal
cartel fine. The FTAIA limits the application of U.S. antitrust law to foreign
conduct, though it includes exceptions for imports and behavior that affects
U.S. commerce. Motorola had asked the court to review the 7th U.S. Circuit Court
of Appeals’ ruling that the FTAIA blocked Motorola’s claims relating to
allegedly price-fixed liquid crystal display panels that Motorola’s foreign
subsidiaries had bought and incorporated into products abroad. AU Optronics had
asked the court to reconsider the 9th U.S. Circuit Court of Appeals’ conclusion
that the FTAIA did not prevent the DOJ from pursuing its criminal case against
the company and inflicting record-breaking antitrust fines. This continues the
Supreme Court’s trend of refusing to revisit the FTAIA despite repeated
questions regarding interpretation of the legislation.
DOJ Brings Suit against Michigan Hospitals for Agreeing Not to Compete
On June 25, 2015, the DOJ filed a
complaint against four Michigan hospital systems alleging that the hospitals
agreed to not advertise in each other’s territories. Three of the four hospitals
have reached settlement agreements with the DOJ and Michigan’s attorney general
while W.A. Foote Memorial Hospital, operating as Allegiance Health, continues to
settlement agreements with the three other hospitals prohibit each of them
from divvying up territories in the future and require that each hospital put
compliance measures in place to prevent similar issues from occurring in the
future. Allegiance has decided to move forward with the litigation.
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