Biden’s Justice Department sued to block sugar mergers, citing supply chain pressure

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The Biden administration filed a lawsuit on Tuesday to block the proposed merger of the two sugar giants, saying that the acquisition will eliminate competition and increase prices when the global supply chain is already under pressure.

The civil antitrust lawsuit filed in the Federal Court of Delaware is intended to prevent American sugar companies from buying Imperial Sugar. Jonathan Kanter, Assistant Attorney General of the Department of Justice’s Antitrust Division, said in a press release that these companies are “already comfortable” competitors in the sugar industry.

“At a time when global supply chain challenges have threatened the stable availability of important commodities and commodities, this transaction has greatly reduced competition,” Kanter added.

American Sugar Company is a privately held company in Delaware, headquartered in Florida. Imperial Sugar is owned by Louis Dreyfus, a global agricultural group based in the Netherlands. The transaction value is approximately US$315 million.

The two companies did not immediately respond to CNBC’s request for comment on the DOJ lawsuit.

The U.S. Department of Justice’s recent intervention in a major industry transaction has increased the Biden administration’s record of promoting antitrust enforcement. President Joe Biden’s first year in the White House was marked by aggressive measures to combat corporate mergers, including signing a comprehensive executive order and seeking to block or restrict transactions and partnerships in industries ranging from food to publishing to aviation.

In early November, the US Department of Justice filed a lawsuit to try to prevent Penguin Random House from acquiring rival Simon & Schuster for nearly $2.18 billion.

The Justice Department sued in September to block the regional partnership between American Airlines and JetBlue, claiming that the alliance would reduce competition, reduce service quality and increase ticket prices. The two airlines argued that the partnership will help them better compete with Delta Air Lines and United Airlines, and asked a federal judge on Monday to dismiss the lawsuit.

“Strong antitrust enforcement is an important pillar of the Department of Justice’s commitment to ensuring economic opportunity and fairness for all,” Attorney General Merrick Garland said in a press release on Tuesday. “We will not hesitate to challenge anti-competitive mergers that will hurt American consumers and businesses.”

U.S. Attorney General Merrick Garland (Merrick Garland) attended a press conference and announced that the Department of Justice will file a lawsuit with the Washington, D.C. Department of Justice on June 25, 2021, to challenge Georgia’s electoral law, which imposes new measures on voting. limit.

Ken Sedno | Reuters

A press release from the U.S. Department of Justice stated that the transaction between the U.S. Sugar Industry and Imperial Sugar “will place the vast majority of refined sugar sales in the Southeast in the hands of two producers.” The U.S. Department of Justice stated that Americans “will pay more for refined sugar, which is an important input for many foods and beverages.”

As the world recovers from the coronavirus pandemic, consumer demand increases, and the entire economy is concerned about supply chain bottlenecks and shortages.

The complaint alleges that if US Sugar acquires Imperial, it will merge the production of Imperial into the production of United Sugars Corporation, a cooperative that sells sugar produced by US Sugar and three other refineries. The complaint stated that the deal would allow United and Domino to control nearly 75% of sugar sales in the southeastern United States, “subjecting wholesale customers in the region to a comfortable duopoly.”

“As a result, the fragile supply chain will be further strained, and American households will pay more for sugar and many staple food and beverage products,” the lawsuit said.

“This is a simple case: the merger of two direct competitors will lead to a high degree of market concentration and lead to an increase in the prices of products that are vital to our country’s food supply,” the complaint added.

“Simply put: this case is not alarmist.”

– Leslie Josephs of CNBC contributed to this report.

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