Sysco

Sysco Corporation delivers food and supplies to restaurants, hospitals, schools, and hotels. Broadline distribution is a density business: trucks, warehouses, and sales reps that cover a city every day.

In 2015 a federal court granted the FTC a preliminary injunction against Sysco's acquisition of US Foods, the number-two broadliner. The parties abandoned the deal. That injunction is the modern precedent for foodservice mergers. It treated national broadline distribution as a market customers could not replace with cash-and-carry or local specialists for all of their SKUs.

Sysco has kept buying smaller regional distributors. Each deal is below the US Foods scale and still removes a local alternative. The FTC's theory in 2015 is the checklist for those deals: will a hospital or a national restaurant chain lose a bidder?

Exclusive or primary-supplier contracts with chains allocate volume for years. A dropped distributor does not easily restart a warehouse.

The blocked US Foods deal is the boundary. A similar national combination would face the same injunction risk.

Regional roll-ups can recreate local duopolies without a single headline merger.

Primary-supplier contracts are vertical restraints that last as long as the rebate period.

Private-label products inside the broadline book compete with branded manufacturers who depend on Sysco's truck.

Diners do not see Sysco. Restaurants do, as the invoice and the delivery window. Fewer bidders mean less leverage on price and fill rate.

A local farm that sells to restaurants often still needs a broadliner to reach a chain. Delisting is market access.