Justice Department sues to block big sugar merger, warning of price hikes and supply chain strains

The Biden administration on Tuesday sued to block the proposed merger of two sugar industry giants, arguing that that acquisition would erase competition and raise prices at a time when global supply chains are already under pressure.

The civil antitrust lawsuit, filed in federal court in Delaware, aims to stop the United States Sugar from buying Imperial Sugar. The corporations are rivals in the “already cozy” sugar industry, said Jonathan Kanter, assistant attorney general of the Justice Department’s Antitrust Division, in a press release.

“This deal substantially lessens competition at a time when global supply chain challenges already threaten steady access to important commodities and goods,” Kanter added.

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

“We disagree with the Justice Department’s decision and fully intend to litigate this matter,” U.S. Sugar said in a statement to CNBC. The corporation argued that the merger will increase refined sugar production, bolster the sugar supply for Americans and protect U.S. 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,” U.S. Sugar said.

Imperial did not immediately respond to CNBC’s request for comment.

The DOJ’s latest intervention in a major industry deal adds to the Biden administration’s record of pushing for antitrust enforcement. President Joe Biden‘s first year in the White House has been marked by taking aggressive steps to combat corporate consolidation, including by signing a sweeping executive order and by seeking to block or limit deals and partnerships in industries ranging from food to publishing to airlines.

Earlier in November, the DOJ filed a lawsuit seeking to block Penguin Random House from acquiring rival Simon Schuster for nearly $2.18 billion.

The DOJ in September sued to block a regional partnership between American Airlines and JetBlue Airways, alleging the alliance would reduce competition, lower the quality of service and drive up airfares. The carriers, which have argued that the partnership will help them better compete against Delta Air Lines and United Airlines, on Monday asked a federal judge to dismiss the suit.

“Robust antitrust enforcement is an essential pillar of the Justice Department’s commitment to ensuring economic opportunity and fairness for all,” Attorney General Merrick Garland said in a press release Tuesday. “We will not hesitate to challenge anticompetitive mergers that would harm American consumers and businesses alike.”

Article source: https://www.cnbc.com/2021/11/23/biden-doj-sues-to-block-sugar-merger-cites-supply-chain-strain.html