FTC says it will block Sysco's $3.5B purchase of food supply competitor US Foods

Antitrust regulators are challenging the $3.5 billion sale of US Foods to Sysco, saying the deal would hurt customers by reducing competition between food supply companies.

Houston-based Sysco Corp. agreed to buy US Foods in December 2013, but they can't complete the deal without approval from the Federal Trade Commission.

The FTC on Thursday filed a complaint to block the deal, saying the combined company would likely lead to higher prices for customers like restaurants, hospitals, hotels and schools. Sysco says it will contest the FTC's complaint.

Sysco and Rosemont, Illinois-based US Foods had agreed to sell 11 food distribution centers in order to address concerns from the agency, but the FTC says that proposal isn't good enough.