The competition watchdog has said that it might block the tie-up between two major sugar companies if they cannot allay its concerns that the deal could lead to higher prices for customers.
The Competition and Markets Authority (CMA) said that it believed competition could be harmed by the plan by the maker of the Tate & Lyle brand to buy the maker of the Whitworths brand.
T&L Sugars (TLS) – the company behind Tate & Lyle – announced its plan to purchase Tereos UK and Ireland’s business-to-consumer packed sugar unit in November.
The deal could “lead to a substantial lessening of competition,” the CMA said, as it gave the two firms five working days to offer remedies or face a second-phase investigation by the watchdog.
TLS refines and distributes sugar and similar products to supermarkets, wholesales, hotels and cafes in the UK.
The part of Tereos it plans to buy packages and distributes sugar from its Normanton, West Yorkshire, factory to UK buyers. One of its brands is Whitworths.
There is only one other competitor which supplies packed sugar to many businesses, including supermarkets, the CMA said. That competitor is British Sugar, a sister company of Primark.
Supermarkets could end up paying more for sugar, which could increase prices on the shelves for customers, if the deal goes ahead, the CMA said.
“The supply of sugar to grocery retailers in the UK is already highly concentrated. This deal would bring together two of the three players in the UK sugar sector, reducing competition and choice further for people and businesses,” said CMA senior director of mergers Sorcha O’Carroll.
“It’s now up to TLS and Tereos to find a way to address our competition concerns to avoid the deal being referred to an in-depth phase 2 investigation.”