The U.S. Federal Trade Commission is considering a possible antitrust lawsuit against Sysco Corp's (SYY.N) $3.5 billion deal to buy debt-ridden US Foods from private equity, the Wall Street Journal reported on Monday citing people with knowledge of the matter.
The FTC has been investigating the proposed merger, which was announced in December and would combine the only two food suppliers with a nationwide reach.
The consumer protection watchdog is also mulling alternatives such as mandating Sysco and US Foods to divest assets to competitors, the report said. (on.wsj.com/1uTDkBj)
The antitrust concerns focus on whether the merger will drive up costs for thousands of restaurants, hospitals and hotels that they supply on nationwide contracts.
The commission is expected to make a decision on whether to block the deal within weeks, the report said.
The mega-merger has already rattled customers who rely on the companies for everything from pre-scrambled eggs for school meals to truffle mousse desserts for high-end restaurants.
US Foods and Sysco were not immediately available for comment on the report.
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