Court documents state that during a 14-month investigation, the FTC filed more than 90 declarations of customers, distributors and others in the broadline foodservice industry as part of the agency's preliminary injunction blocking the Sysco-US Foods merger. On March 6, Sysco and US Foods filed a motion requesting the disclosure.
Under the current protective order, the only employees at Sysco and US Foods authorized to access any part of the declarations — including the identities of the declarants — are three members of their respective in-house legal teams, according to court documents.
Judge Amit Mehta modified the protective order to stipulate that: “Defendants’ counsel shall instruct any employee to whom disclosure is made that (1) the disclosure is for the limited purpose of preparing the defense and (2) the submitter’s identity and the fact that the submitter provided evidence in the investigation shall not be further disclosed or used for any purpose other than aiding counsel.”
FTC argued that the identities of its witnesses should remain confidential to prevent retaliation against them. Also, releasing the witness list could have a “chilling effect” on witnesses the FTC may seek out for future investigations.
But Mehta ruled the FTC’s concerns were unsubstantiated and outweighed by Sysco-US Foods’ interest in learning the identities of the declarants.
“The court will not impose a discovery restriction based on speculation by an unspecified number of unidentified declarants,” Mehta said in his ruling. “Although the court understands that some third parties would prefer to avoid disclosure of their identities ...the rules allow for “extensive intrusion” into the affairs of third parties.”
Mehta added that “the mere prospect of retaliation” was not enough to implement protection against limited disclosure.
The judge also was unconvinced by the FTC's concern about a chilling effect on future investigations.
“Plaintiffs were able to obtain over 90 declarations from witnesses employed by companies of various sizes in various markets that compete or contract with Defendants,” Mehta wrote. “Many of the declarations run multiple, single-spaced pages in length and provide substantial detail about the declarants’ businesses, their relationships with Defendants, and their views about the proposed merger.
“Though the declarants routinely requested that their identities be kept confidential and exempt from public disclosure, Plaintiffs have pointed to only one unnamed declarant who expressly said that he would not have voluntarily participated in the investigation if he believed his name would become public.”
Commissioners voted 3-2 to issue an administrative complaint and to authorize FTC staff to seek a temporary restraining order and preliminary injunction in federal district court. The FTC said the merger would eliminate competition in the marketplace and create “a dominant national broadline foodservice distributor.” The total value of the transaction is an estimated $8.2 billion.