Court thwarts attempts by DOJ to block US Sugar mega-deal: 'Ruling will allow our acquisition of Imperial Sugar to proceed as planned'

By Elaine Watson

- Last updated on GMT

 Image credit: GettyImages-CherriesJD
Image credit: GettyImages-CherriesJD

Related tags Sugar US Sugar Imperial sugar

A US district court in Delaware has thwarted attempts by the Department of Justice (DOJ) to block a sugar industry mega-deal it argued would create a "cozy duopoly": US Sugar’s proposed acquisition of rival Imperial Sugar.

Following a four-day bench trial earlier this year, US District Judge Maryellen Noreika issued a judgment “in favor of Defendants ​[US Sugar et al] and against Plaintiff ​[DOJ] that the United States Sugar Corporation's acquisition of Imperial Sugar Company will not violate Section 7 of the Clayton Act."​  

The memorandum opinion is currently under seal to protect “competitive sensitive​” information, so it is not clear on what basis Noreika came to her conclusion, but the opinion will be released after all parties have proposed redactions.

The DOJ filed a civil antitrust lawsuit​​* in Delaware in late 2020 alleging that the proposed transaction 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​​.”

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​.”​​

US Sugar: Deal will provide greater job security for employees at Imperial Sugar’s refinery​

However, attorneys for Florida-based US Sugar argued that the deal would not result in higher prices or harm sugar buyers, and claimed the acquisition would provide an additional refinery for sugar cane grown by its farmers in south Florida and provide greater job security for employees at Imperial Sugar’s refinery in Port Wentworth, Georgia.

Without the acquisition, Imperial will at best continue to be a supplier of high-priced refined sugar dependent on high-cost raw sugar imports from Mexico. At worst, Imperial’s Port Wentworth refinery may no longer be able to serve customers in the future if it cannot secure lower cost supplies of raw sugar​​.”

'Today’s court ruling will allow our acquisition of Imperial Sugar to proceed as planned'

In a statement issued following Judge Noreika’s ruling on Sept 23, US Sugar told FoodNavigator-USA: "The people of US Sugar are pleased that today’s court ruling will allow our acquisition of Imperial Sugar to proceed as planned:  enabling us to increase our sugar production, enhance the local Georgia economy and benefit our employees and customers."

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 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 sought a ruling finding that the deal violates The Clayton Act, and to permanently stop the two parties from getting together. Read more HERE.

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