The UK’s competition watchdog has raised concerns over the proposed acquisition of Tereos UK & Ireland’s packed sugar business by T&L Sugars, saying that it could reduce competition and increase sugar prices for UK shoppers. The Competition and Markets Authority (CMA) has given the companies five working days to address its issues, or face a more in-depth investigation.
What is the Deal and Why is it Controversial?
T&L Sugars, a subsidiary of ASR Group International, is one of the leading sugar producers and distributors in the UK, operating under the Tate and Lyle brand and private labels. Tereos UK & Ireland, a subsidiary of Tereos SCA, is another major player in the UK sugar market, operating under the Whitworths brand and private labels. The deal, announced in November 2023, involves the sale of Tereos UK & Ireland’s business-to-consumer (B2C) packed sugar activities, including its packing and distribution site in Normanton, West Yorkshire, to T&L Sugars.
The deal is controversial because it would combine two of the three main suppliers of packed sugar to UK retailers, leaving only British Sugar as the remaining competitor. The CMA said that this could result in a substantial lessening of competition in the supply of various types of packed sugar, such as granulated, caster, and icing sugar, to supermarkets, grocery wholesalers, and foodservice outlets. The CMA also said that this could lead to higher prices and lower quality for UK shoppers, who buy about 1.5 million tonnes of packed sugar every year.
![UK Sugar Prices Could Rise Due to T&L Sugars and Tereos Deal, CMA Warns 1 T&L Sugars](https://newfoundtimes.com/wp-content/uploads/2024/03/TL-Sugars.jpg)
What are the Possible Solutions and Outcomes?
The CMA has given T&L Sugars and Tereos UK & Ireland until March 15, 2024, to offer solutions that would fully resolve its competition concerns. These could include selling parts of their businesses or assets, or agreeing to certain behavioural or contractual commitments. If the companies fail to do so, or if the CMA is not satisfied with their proposals, the deal will be referred to a more in-depth phase 2 investigation, which could take up to six months.
The CMA has the power to block or modify the deal, or impose conditions or remedies, if it finds that it would result in a significant reduction of competition in the UK sugar market. Alternatively, the CMA could clear the deal, or approve it with or without modifications, if it finds that it would not harm competition, or that the benefits of the deal would outweigh the harms.
What are the Reactions and Responses of the Companies?
T&L Sugars and Tereos UK & Ireland have not commented publicly on the CMA’s announcement, or on their plans to address its concerns. However, in a statement issued in November 2023, when the deal was announced, the companies said that the deal would create synergies and efficiencies, and benefit their customers and consumers. They also said that the deal would secure the future of the Normanton site and its employees, and that they would work closely with the CMA to obtain the necessary approvals.
The CMA’s announcement has also drawn reactions from other stakeholders in the UK sugar industry, such as trade associations, farmers, and consumer groups. Some have expressed support for the deal, saying that it would create a stronger and more competitive sugar sector, and that it would not affect the supply or price of sugar in the UK. Others have expressed opposition or concern, saying that the deal would create a duopoly and reduce consumer choice, and that it would affect the sustainability and diversity of the UK sugar industry.
What are the Implications and Impacts of the Deal?
The deal, if approved, could have significant implications and impacts for the UK sugar industry and market, as well as for the wider economy and society. Some of the possible effects are:
- The deal could change the structure and dynamics of the UK sugar market, which is already highly concentrated and regulated. The deal could reduce the number of suppliers and increase the market power of the remaining players, which could affect the prices, quality, and availability of sugar products for UK retailers and consumers.
- The deal could affect the supply chain and sourcing of sugar in the UK, which is dependent on both domestic and imported sugar. The deal could affect the demand and supply of sugar beet, which is grown by UK farmers and processed by British Sugar, as well as the demand and supply of cane sugar, which is imported from overseas and refined by T&L Sugars and Tereos UK & Ireland. The deal could also affect the trade and tariff arrangements of sugar in the UK, which are subject to the UK-EU trade deal and the UK’s trade agreements with other countries.
- The deal could affect the innovation and development of the UK sugar industry, which is facing various challenges and opportunities, such as changing consumer preferences, environmental and social issues, and new technologies and products. The deal could affect the investment and research activities of the sugar companies, as well as their collaboration and competition with other players in the industry, such as food and drink manufacturers, retailers, and start-ups.