US Sugar hits back as DOJ sues to block sugar mega-deal it says would create a 'cozy duopoly'

By Elaine Watson contact

- Last updated on GMT

DOJ: Merger would 'eliminate aggressive competition in the supply of refined sugar...' Image credit: GettyImages-CherriesJD
DOJ: Merger would 'eliminate aggressive competition in the supply of refined sugar...' Image credit: GettyImages-CherriesJD

Related tags: Sugar, US Sugar, Imperial sugar company

Sugar giant US Sugar says it “fully intends to litigate” to prove its proposed deal to acquire rival Imperial Sugar will not result in higher prices and harm sugar buyers after the Department of Justice (DOJ) filed an anti-trust lawsuit in a bid to block the deal.

In a statement sent to FoodNavigator-USA this morning, a US Sugar spokesperson said: “We disagree with the Justice Department’s decision and fully intend to litigate this matter.

“The facts will ultimately show that US Sugar’s acquisition of Imperial Sugar will result in increased production and distribution of refined sugar, provide a more secure sugar supply for American farmers, food producers and consumers, and protect American jobs. This transaction will improve supply chain logistics and will not result in higher prices or any harm to customers and consumers. We look forward to making our case in court.”

Its comments came as the DOJ filed a civil antitrust lawsuit​* in Delaware alleging that the transaction (announced back in March) would “leave an overwhelming majority of refined sugar sales across the Southeast in the hands of only two producers”​ and that, “as a result, American businesses and consumers would pay more for refined sugar, a significant input for many foods and beverages​.”

DOJ: Deal would leave 'wholesale customers in this region at the mercy of a cozy duopoly'

According to the complaint, the proposed acquisition would increase the likelihood that United and Domino (ASR Group), the two largest remaining refiners in the region, "will find it in their mutual self-interest to coordinate rather than compete on price, quality, and service reliability.

"If US Sugar is allowed to acquire Imperial and to fold Imperial’s production into the United cooperative, United and just one other company, American Sugar Refining (ASR/Domino), would account for nearly 75% of sugar sales across the Southeast, leaving wholesale customers in this region at the mercy of a cozy duopoly.

It adds: "This is a straightforward case: the merger of two direct competitors that will result in a highly concentrated market and lead to higher prices for a product that is vital to our country’s food supply."

‘Multibillion-dollar corporations are seeking to further consolidate an already cozy sugar industry’

In a press release issued this morning, Assistant Attorney General Jonathan Kanter said that “US Sugar and Imperial Sugar are already multibillion-dollar corporations and are seeking to further consolidate an already cozy 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.

“The department’s lawsuit seeks to preserve the important competition between US Sugar and Imperial Sugar and protect the resiliency of American domestic sugar supply.” 

US Sugar is the world’s largest vertically-integrated cane sugar milling and refining operation, operating a large sugar refinery in Florida, and selling all of its refined sugar through United Sugars, a marketing co-op owned by US Sugar and three other refined sugar producers (American Crystal Sugar Company, Minn-Dak Farmers Cooperative, and Wyoming Sugar Company).

Imperial Sugar (owned by Louis Dreyfus Company LLC,) operates a sugar refinery in Georgia and an intermediate sugar transfer and liquification facility in Ludlow, Kentucky, and sells its refined sugar directly to customers, generating revenues topping $700m in 2020.

*The case is United States of America v United States Sugar Corporation, United Sugars Corporation, Imperial Sugar Company, and Louis Dreyfus Company LLC 1:21-cv-01644. The DOJ seeks a ruling finding that the deal violates The Clayton Act, and to permanently stop the two parties from getting together.

Merrick_Garland_official_port

"Robust antitrust enforcement is an essential pillar of the Justice Department’s commitment to ensuring economic opportunity and fairness for all. We will not hesitate to challenge anticompetitive mergers that would harm American consumers and businesses alike."

Attorney General Merrick Garland  (pic credit: Office of Merrick Garland)

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