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US sues to halt sugar merger, says it would harm competition

Published:Wednesday | November 24, 2021 | 12:08 AM
US Attorney General Merrick Garland.
US Attorney General Merrick Garland.

The United States Justice Department filed a lawsuit on Tuesday seeking to block a major US sugar manufacturer from acquiring its rival, arguing that allowing the deal would harm competition and consumers.

The suit was filed in federal court in Delaware. It comes about eight months after US Sugar announced it reached an agreement to acquire the Imperial Sugar Company, one of the largest sugar refiners in the nation.

The lawsuit is the latest example of the Justice Department’s approach to aggressive enforcement of federal antitrust law that officials say is aimed at ensuring a fair and competitive market. It comes months after President Joe Biden signed an executive order that called on the Justice Department and Federal Trade Commission to vigorously enforce antitrust statutes and promote market competition.

“Robust antitrust enforcement is an essential pillar of the Justice Department’s commitment to ensuring economic opportunity and fairness for all,” Attorney General Merrick Garland said in a statement. “We will not hesitate to challenge anticompetitive mergers that would harm American consumers and businesses alike.”

The Justice Department argues that the proposed acquisition would “further consolidate an already-concentrated market for refined sugar”. It would cut down on competition, leaving only the new consolidated company and one other major sugar company selling a significant share of refined sugar in the southeastern US, the Justice Department contends.

The Justice Department says US Sugar, which operates a large refinery in Florida, sells all of its sugar through a marketing co-operative known as the United Sugars Corporation. Imperial Sugar operates a refinery in Savannah, Georgia, and a sugar transfer and liquidation facility in Ludlow, Kentucky.

Assistant Attorney General Jonathan Kanter, who leads the Justice Department’s antitrust division, said the companies were “seeking to further consolidate an already-cosy sugar industry”.

“Their merger would eliminate aggressive competition in the supply of refined sugar that leads to lower prices, better quality, and more reliable service,” he said.

The companies announced the acquisition in March, saying that it would return Imperial Sugar to all-American ownership. Imperial Sugar is a subsidiary of Louis Dreyfus Company, which is headquartered in the Netherlands. The Justice Department says Imperial Sugar’s revenues were over US$700 million in 2020.

When the acquisition was announced, the companies said it would help expand production and reduce manufacturing costs, and would increase the security of the US sugar supply. The companies also said a new, combined company would offer better competition and expand distribution in the US.

Representatives for the two companies did not immediately respond to requests for comment.