A federal judge ruled Tuesday that Sysco Corp.'s $3.5 billion merger with U.S. Foods "will substantially impair competition" and should be stopped.
The decision by U.S. Judge Amit Mehta hands a victory to the Federal Trade Commission, which objected to the merger of the two largest U.S. food processors, claiming the combination violated federal antitrust rules and would harm consumers.
The judge's decision could be a fatal blow to the merger since the further review requested by the Federal Trade Commission is a lengthy and complicated process.
U.S. Foods operates a warehouse facility at 5901 Shallowford Road in Chattanooga, while Sysco serves the local market from its facilities in Atlanta, Knoxville and Nashville.
Sysco Chief Executive Officer Bill DeLaney said the company was "profoundly disappointed" with the ruling.
"Nevertheless, we certainly understood this outcome to be possible and have been developing plans for the business moving forward. We will take a few days to closely review the court's ruling and assess our legal and contractual obligations, including the merits of terminating the merger agreement," DeLaney said.
The FTC sued in February to temporarily stop Sysco's merger plan while an internal FTC judge heard the case. A district court judge granted a preliminary injunction allowing that process to go forward.