Biden DOJ sues to dam sugar merger, cites provide chain pressure

The Biden administration on Tuesday sued to dam the proposed merger of two sugar business giants, arguing that that acquisition would erase competitors and lift costs at a time when world provide chains are already underneath strain.

The civil antitrust lawsuit, filed in federal courtroom in Delaware, goals to cease the US Sugar from shopping for Imperial Sugar. The companies are rivals within the “already cozy” sugar business, mentioned Jonathan Kanter, assistant legal professional common of the Justice Division’s Antitrust Division, in a press launch.

“This deal considerably lessens competitors at a time when world provide chain challenges already threaten regular entry to essential commodities and items,” Kanter added.

U.S. Sugar is a Delaware company that is privately held and headquartered in Florida. Imperial Sugar is owned by Louis Dreyfus, a worldwide agricultural conglomerate primarily based within the Netherlands. The deal is valued at about $315 million.

The businesses didn’t instantly reply to CNBC’s requests for touch upon the DOJ lawsuit.

The DOJ’s newest intervention in a serious business deal provides to the Biden administration’s file of pushing for antitrust enforcement. President Joe Biden’s first yr within the White Home has been marked by taking aggressive steps to fight company consolidation, together with by signing a sweeping govt order and by looking for to dam or restrict offers and partnerships in industries starting from meals to publishing to airways.

Earlier in November, the DOJ filed a lawsuit looking for to dam Penguin Random Home from buying rival Simon & Schuster for almost $2.18 billion.

The DOJ in September sued to block a regional partnership between American Airways and JetBlue Airways, alleging the alliance would cut back competitors, decrease the standard of service and drive up airfares. The carriers, which have argued that the partnership will assist them higher compete towards Delta Air Strains and United Airways, on Monday requested a federal choose to dismiss the swimsuit.

“Sturdy antitrust enforcement is an important pillar of the Justice Division’s dedication to making sure financial alternative and equity for all,” Lawyer Basic Merrick Garland mentioned in a press launch Tuesday. “We won’t hesitate to problem anticompetitive mergers that may hurt American customers and companies alike.”

The deal between U.S. Sugar and Imperial Sugar “would depart an awesome majority of refined sugar gross sales throughout the Southeast within the arms of solely two producers,” the DOJ press launch mentioned. Individuals because of this “would pay extra for refined sugar, a major enter for a lot of meals and drinks,” the DOJ mentioned.

Because the world recovers from the coronavirus pandemic and client demand will increase, fears of provide chain bottlenecks and shortfalls are additionally on the rise throughout the financial system.

The grievance says that if U.S. Sugar acquires Imperial, it could fold Imperial’s manufacturing into that of United Sugars Company, a cooperative that sells the sugar produced by U.S. Sugar and three different refiners. That deal would depart simply two corporations, United and Domino, accountable for almost 75% of sugar gross sales throughout the southeast U.S., “leaving wholesale clients on this area on the mercy of a comfy duopoly,” the grievance alleges.

“Consequently, fragile provide chains could be additional strained, and American households would pay extra for sugar and plenty of staple meals and beverage merchandise,” the lawsuit says.

“It is a simple case: the merger of two direct opponents that may end in a extremely concentrated market and result in greater costs for a product that’s very important to our nation’s meals provide,” the grievance provides.

“Merely put: this case shouldn’t be an in depth name.”

— CNBC’s Leslie Josephs contributed to this report.