Merger’s Opponents Can’t Conceal Their Identities

WASHINGTON (CN) - Two dozen opponents of a proposed merger between Sysco and US Foods Inc. are not entitled to have their identities kept secret, a federal judge ruled.

The $8.2 billion deal would combine the nation's two largest food distributors, a hookup the Federal Trade Commission says would hurt competition. All but six of the entities seeking to protect their identities are current clients of either Sysco or US Foods or both.

In his ruling, U.S. District Judge Amit Mehta said he understood the concerns the opponents expressed about having their identities reveal ed -- including the possibility of retaliation -- but said this unease is outweighed by the need to give Sysco and US Foods a fair opportunity to properly prepare their legal defense against the FTC's restraining order blocking the merger.

,"The importance of transparency is heightened in cases in which the government seeks to block or sanction private behavior," Mehta wrote. "Because the stakes are so high and the consequences so profound when the government is the plaintiff, the rules that require a transparent exchange of information take on particular importance in promoting and ensuring a fair process."

The merger was originally set to take place March 2, but the FTC claimed that the merger of Sysco and US Foods would cause prices for food-service customers to soar.

According to the ruling, the FTC previously agreed to grant anonymity to the merger opponents, but the court's jurisdiction superseded that of the FTC once the commission filed its suit.

The competitors who filed motions for protective orders "hypothesized about the harm that would occur if their identities were disclosed, but did not offer a specific demonstration of facts to support their concerns," Mehta wrote.

Clients expressed fears that Sysco and US Foods would retaliate for their testimony by raising prices or refusing to service their establishments. The unidentified Shamrock Foods executive was concerned that his cooperation could damage his future potential career growth.

Mehta noted that the identities of the opponents who filed motions will not be made public, and will be used only to help prepare a defense and to aid either counsel.

The court had previously placed a protective order over confidential material in the case, limiting the access to sensitive information to Sysco's and US Foods' outside counsel and two in-house attorneys. But Sysco, US Foods, and USF Holding Corp. complained that the order denied access to their own officers and employees.

Mehta reiterated that the previous ruling is still in effect.

"Confidential trade secrets, competitive intelligence or other such proprietary information contained in the declarations is accessible only to Defendants' outside counsel and two designated in-house lawyers for each Defendant," Mehta wrote.

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