By Brent Kendall and Annie Gasparro 

A divided Federal Trade Commission sued Thursday to block Sysco Corp.'s acquisition of rival US Foods Inc., a long-awaited move that sets the stage for a major court battle over a plan to combine the nation's two largest food distributors.

The FTC alleged the proposed tie-up would create a dominant national company that could raise prices and reduce service for restaurants, hotels, schools and other institutions that buy food, paper products and a wide range of supplies from Sysco and US Foods.

A combined company would control 75% of the sales in broadline food-service distribution for national customers, the FTC alleged. It also said the merger would be problematic in 32 local markets around the U.S.

The lawsuit came after the FTC spent more than a year reviewing the proposed deal and after negotiations between the companies and the government didn't lead to a settlement.

The case is the most prominent FTC merger challenge since nominees of President Barack Obama took the commission's helm in 2009. The decision to sue split the panel along partisan lines. FTC Chairwoman Edith Ramirez and two other Democratic commissioners voted for the challenge, while the panel's two Republicans voted against.

The FTC said the two companies were the only food distributors with a broad national footprint that offered extensive product lines, frequent deliveries and services like menu planning.

The commission said many hotel chains and food-service management companies consider Sysco and US Foods to be each other's closest competitor.

"Consumers across the country, and the businesses that serve them, benefit from the healthy competition between Sysco and US Foods, whether they eat at a restaurant, hotel or a hospital," said Debbie Feinstein, who heads the FTC's bureau of competition.

Sysco said a merger with US Foods would help improve service and cut hundreds of millions of dollars in costs. The companies have said they can lower prices for customers as they save money by buying and trucking food in greater bulk.

"The facts are strongly in our favor, and we look forward to making our case in court," Sysco Chief Executive Bill DeLaney said in a written statement. "Those of us who work in this industry every day know it is fiercely competitive."

Mr. DeLaney said the FTC misunderstood market dynamics, arguing that the majority of national customers use multiple regional and local food distributors. He also said local restaurants have plenty of choices, from self-service stores like Costco Wholesale Corp. to specialty artisan options.

Sysco Corp. said in a release Friday that the FTC's decision is "based on an erroneous view of the competitive dynamics of the foodservice distribution industry," and said the FTC's narrow 3-2 vote demonstrates a lack of consensus that the merger would be harmful to competition. Sysco's antitrust lawyers will speak about the case on a conference call at 12 p.m. EST Friday.

US Foods didn't respond to a request for comment. The company is owned by private-equity firms including KKR & Co. Shares of Sysco fell 3.4% to $38.56 on the NYSE on Thursday.

Restaurant owners offered a mix of views on the suit. Suzanne Aquila, a Sysco customer who owns Bloomington Bagel Co. in Bloomington, Ind., said that local distributors can't compete with companies like Sysco because of its ability to buy in bulk and its wide range of services.

"I think the decision to challenge the merger is the only decision to make," Ms. Aquila added. "We've had quite a run-up in food costs this year, and without competition, we would have no tools to try to contain those costs."

Others said the anticipated merger has already sparked more heated competition in their markets.

"Everybody in our area in South Carolina thought it was a done deal," said Bobby Williams, owner of a Southern home-cooking chain called Lizard's Thicket. "There have been a lot of new distributors coming into town to try to snatch up business because of it."

Sysco and some of its peers have taken a hit on profits in recent years as rivals such as Restaurant Depot, which offers online ordering and self-service warehouses, wooed its customers. Sysco's earnings have been declining steadily for years, falling 6.1% to $932 million in fiscal 2014, which ended in June, despite a 4.7% increase in revenue to $46.5 billion.

Sysco in recent days escalated preparations to battle a government lawsuit, hiring top antitrust lawyers who are former FTC officials to lead the company's defense. Sysco has said it could keep the merger agreement in place long enough for any case to go to trial.

The FTC plans to try the merger case through its own administrative litigation system, and it set a trial date of July 21. Concurrently it is asking a Washington, D.C., federal court to issue a preliminary injunction to block the deal while the case at the FTC proceeds.

The federal court proceedings could be a crucial testing ground for the case because they will likely take place before the in-house trial scheduled at the FTC.

The companies' merger agreement expires in September, but they could extend it if litigation isn't wrapped up by then.

Lengthy settlement talks between the two sides, including last-ditch meetings between the firms and the commissioners last week, failed to produce an agreement to allow the merger.

Sysco offered to address FTC concerns about competition by selling off a large package of assets that generate $4.6 billion in annual revenue to the nation's third-largest food distributor, Performance Food Group. Under that proposed deal, PFG would expand significantly by buying 11 US Foods distribution centers. The company declined to comment on the FTC's lawsuit.

The FTC's Ms. Feinstein said the proposed settlement didn't fix the problems the commission has identified. "We don't think PFG will be as good a competitor as US Foods was prior to the merger," she said.

The lawsuit is the FTC's highest-profile merger challenge since 2007, when it sought to stop Whole Foods Market Inc. from acquiring a rival. Recent headline-grabbing merger lawsuits under the Obama administration have come from the Justice Department, which shares U.S. antitrust authority.

The FTC's two Republicans didn't offer details on why they opposed the lawsuit. Dissenting commissioners often choose not to air their criticisms while the FTC is in active litigation. One of the dissenters, Commissioner Joshua Wright, acknowledged this custom on Twitter, but he also tweeted that he had "no reason to believe" the merger violated federal antitrust law.

Angela Chen contributed to this article.

Write to Brent Kendall at brent.kendall@wsj.com and Annie Gasparro at annie.gasparro@wsj.com

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