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FTC files suit to block Sysco-U.S. Foods merger

The Federal Trade Commission filed an administrative complaint charging that the proposed merger of Sysco and US Foods would violate the antitrust laws by significantly reducing competition nationwide and in 32 local markets for broadline foodservice distribution services.

The FTC alleges that if the merger goes forward as proposed, foodservice customers, including restaurants, hospitals, hotels and schools, would likely face higher prices and diminished service than would be the case but for the merger.

The FTC also authorized staff to seek in federal court a temporary restraining order and a preliminary injunction to prevent the parties from consummating the merger, and to maintain the status quo pending the administrative proceeding.

“This proposed merger would eliminate significant competition in the marketplace and create a dominant national broadline foodservice distributor,” Debbie Feinstein, director of the FTC’s Bureau of Competition, said in a statement. “Consumers across the country, and the businesses that serve them, benefit from the healthy competition between Sysco and U.S. Foods, whether they eat at a restaurant, hotel or a hospital.”

Sysco and US Foods are the largest broadline foodservice distributors in the United States. Broadline distributors offer extensive product lines, including national-brand and private-label food products, and provide frequent and flexible delivery, high levels of customer service, and other value-added services such as order tracking, menu planning, and nutritional information.

According to the FTC complaint, a combined Sysco-U.S. Foods would account for 75 percent of the national market for broadline distribution services. In addition, the parties would also hold high shares in a number of local markets.

The FTC also charges that the proposed sale of 11 U.S. Foods distribution centers to Performance Food Group would neither enable PFG to replace U.S. Foods as a competitor nor counteract the significant competitive harm caused by the merger.

According to the FTC, even with the addition of 11 distribution centers, PFG would not approach the scale or competitiveness of U.S. Foods today, and therefore would not restore the competition eliminated by this merger.

The following state attorneys general have joined the FTC’s complaint for a preliminary injunction to be filed in federal district court: California, Illinois, Iowa, Maryland, Minnesota, Nebraska, Ohio, Virginia, Pennsylvania, Tennessee and the District of Columbia.

The FTC vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction in federal court was 3-2, with Commissioners Maureen K. Ohlhausen and Joshua D. Wright voting no. The administrative trial is scheduled to begin on July 21, 2015.

Lipman now featuring ‘taters and maters’

Lipman, one of North America’s larger open field tomato growers, is rounding out its fresh produce programs with one of the most diverse vegetables available: potatoes.  

“Fresh from Florida, Lipman’s red and gold potatoes are available to purchase for a 10-week period from the middle of February through April,” Jessica Kerstein, who handles marketing and business development at Lipman, said in a press release. “Our potatoes are consistently delicious and grown with a great deal of care to ensure quality.”

Potato harvest has begun at Lipman and they will be available in bulk totes, 50-pound boxes and bags. Fresh red and yellow potatoes are often eaten skin-on — unlike their baked ancestors — making them more nutritious.

The company said its potato portfolio is a great item to pair with its ever-expanding tomato programs. Lipman encourages the marriage of the potatoes as the “taters” in its “Taters and Maters” campaign.

Trader Joe’s, Wegmans on top for customer satisfaction

Supermarket customer satisfaction is down, according to a report released by the American Customer Satisfaction Index. Rising food prices played a major role — increasing 3.4 percent last year. But there was good news for some retailers: Trader Joe’s and Wegmans were ranked first in customer satisfaction, the first time Publix didn't lead the category. Walmart was ranked lowest in the category.

Earlier this month Wegmans topped another list when it was ranked No. 1 for corporate reputation according to the 16th annual Harris Poll Reputation Quotient study. Publix, which weighed in at the eighth spot, was the second-highest supermarket chain on the list.

According to the report, customer satisfaction with brick-and-mortar retail categories as a whole is down for the first time in four years; only Internet retail is up from a year ago.

“Even with frequent price discounts, it’s difficult for supermarkets to moderate the negative effect of rising food costs, especially when wage growth is weak,” Claes Fornell, ACSI chairman and founder, said in a press release.

Publix tied H-E-B. While customer satisfaction with Publix is still very strong, this is the first year that the chain is not on top among supermarkets. Whole Foods, Target’s grocery division and ALDI all come in next. Other chains above industry average are BI-LO, including Winn-Dixie; Kroger; ShopRite; and Delhaize America (Food Lion, Hannaford).

SuperValu, Safeway and Albertsons follow closely behind. Next are Ahold USA (Stop & Shop, Giant) and Giant Eagle. Walmart’s grocery division dipped to an industry low, trailing in the battle for satisfied customers alongside its discount store general merchandise business.

Is West Coast port dispute near its end?

Several news reporters in California are claiming that the West Coast ports labor dispute revolves around one remaining issue and may be close to being settled.

According to anonymous reports, the last negotiating hurdle remaining has to do with the use of arbitrators to settle ongoing disputes while a contract is in force. In the past, the contract between the 29 West Coast ports, represented by the Pacific Maritime Association, and the International Longshore and Warehouse Union, has allowed for the use of arbitrators to rule on actions such as perceived work slowdowns. The ILWU is reportedly upset with the rulings of one particular arbitrator who has ruled against them many times. They are attempting to change the current arbitration system.

Though there is currently a news blackout surrounding the negotiations, on Feb. 9, the Pacific Maritime Association did issue a press release discussing the arbitration issue. The press release noted that the ILWU wants to be able to fire any arbitrator who rules against the union. Pacific Maritime Association said this provision would give the ILWU veto power over arbitrators’ rights to prevent union slowdowns, and in so doing would threaten the consistent and reliable movement of cargo through West Coast ports.

“The ILWU is essentially seeking the right to fire judges who rule against them,” Pacific Maritime Association spokesman Wade Gates said in the press release. “The waterfront arbitration system is an essential check-and-balance against illegal labor actions. It would be reckless to allow a single party to change the rules as the union desires.”

In the same press release, the association said that the ILWU was found guilty of more than 200 slowdowns or work stoppages during the 2008–14 contract period.

A Los Angeles Times reporter wrote in a story published today that three anonymous sources confirmed that the arbitrator issue is the stumbling block. ILWU is insisting on a change to the system and the association is resisting it. The same report appeared on several San Francisco area radio stations. Neither Pacific Maritime Association nor ILWU representatives were quoted in those stories as they cited the imposed news blackout.

The negotiations this week continued with the help of U.S. Secretary of Labor Tom Perez, who stepped in at the request of President Obama. Perez has been at least an observer in the negotiations and did say that he believed a settlement was near.

This comes after a contentious week involving actions from both sides. Over the holiday weekend, Feb. 12-16, Pacific Maritime Association closed the ports on four of five days to avoid paying hefty holiday pay. The port association said the continued work slowdown were in effect a “strike with pay” and the ports determined they would not potentially pay increased holiday rates for less work.

Port activity resumed at all 29 ports on Tuesday, Feb. 17, but no ILWU workers showed up at the port of Oakland for work on Thursday, Feb. 19. ILWU officials said there was no work slowdown but instead a scheduled union meeting that resulted in the lack of work activity.

The 29 ports on the West Coast handle about $1 trillion worth of goods annually. Several importers and exporters, including the California citrus industry, have blamed the port dispute for lost sales. California Citrus Mutual said fruit has rotted on the docks, and shippers have lost potential sales to foreign customers during the height of the California Navel orange season.

Americans need to eat more produce, less meat

WASHINGTON —An expert committee has recommended that Americans eat more plant-based food, including fruits and vegetables. The Produce Marketing Association hailed the advice — as this report serves as a foundation for the Dietary Guidelines for Americans 2015, which is due out later this year. In addition to the health benefits, the report stated that plant-based food is more environmentally sustainable than animal-based food.

Fourteen experts on the 2015 Dietary Guidelines Advisory Committee held seven public meetings over the last two years to develop recommendations for the federal agencies.

“Now that the advisory committee has completed its recommendations, HHS and USDA will review this advisory report, along with comments from the public — including other experts — and input from other federal agencies as we begin the process of updating the guidelines," said Health & Human Services Secretary Sylvia Burwell and Agriculture Secretary Tom Vilsack in a joint statement.

PMA pointed to key findings in the report that fruits and vegetables play an integral role in a healthy diet but are still not being consumed enough.

“Notably, the committee found that the consumption of fruits has remained low, but stable, for the U.S. population,” said PMA President Cathy Burns. “Vegetable intake has declined, particularly among children and adolescents. Findings like this reinforce the need for marketing initiatives that make a connection to our healthy foods for young consumers – like the eat brighter! movement.”

Burns said PMA will be submitting comments that support the commitment to “fresh, affordable and nutritious options that are available to consumers of all demographics.”

Soon after it was released Thursday, the report was criticized by the meat industry for its move away from recommending lean meat dishes.

“We appreciate the Dietary Guidelines Advisory Committee’s recognition of the important role that lean meat can play in a healthy balanced diet, but lean meat’s relegation to a footnote ignores the countless studies and data that the committee reviewed for the last two years that showed unequivocally that meat and poultry are among the most nutrient-dense foods available,” said North American Meat Institute President and CEO Barry Carpenter.

A consumer advocate, however, praised the committee for its latest recommendations.

“The committee has boldly stated that a sustainable diet, higher in plant-based foods and lower in animal-based foods, is better for both our health and the planet than the current American diet,” said Michael Jacobson, director of the Center for Science in the Public Interest. “The DGAC has always urged greater consumption of fruits and vegetables, but the recommendation to eat less red and processed meat deserves to be in the final Dietary Guidelines for Americans — and not excised at the behest of the meat industry.”

Others criticized the report for delving into the issue of sustainability as part of its nutrition guidelines.

The public will get a chance to comment on the report at a March 24 meeting and forward comments to the agencies by April 8.