Sugar deal could raise prices for UK shoppers
The CMA’s initial investigation has found that TLS’ purchase of Tereos UK & Ireland could result in higher sugar prices.
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Following an initial Phase 1 investigation, the Competition and Markets Authority (CMA) has found that T&L Sugars Limited’s (TLS) purchase of Tereos UK & Ireland’s ‘business to consumer’ packed sugar business (TUKI B2C) from Tereos SCA (Tereos), could lead to a substantial lessening of competition. TLS and Tereos now have 5 working days to offer solutions which fully resolve the CMA’s competition concerns, otherwise it will refer the deal to an in-depth Phase 2 investigation.
TLS is a sugar producer which refines and distributes sugar and related products, including under the Tate and Lyle brand, to supermarkets and other businesses such as grocery wholesalers, hotels, and cafes in the UK. TUKI B2C sources sugar from its Europe-based parent company, Tereos, and uses a facility in Normanton (West Yorkshire) as a packing and distribution site to sell packed sugar in the UK, including under the Whitworths brand.
These two companies only face competition from one other company, British Sugar, in the supply of packed sugar to a range of businesses, including supermarkets. The loss of competition from the deal could lead to supermarkets paying more for packed sugar and shoppers could see higher prices for packs of sugar on shelves as a result.
Sorcha O’Carroll, Senior Director of Mergers at 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.
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.
For more information, visit the T&L Sugars/Tereos merger inquiry case page.
Notes to editors:
- T&L Sugars Limited announced the deal to buy the UK packing and distribution site and ‘business-to-consumer’ activities from Tereos UK & Ireland on 2 November 2023 and the Competition and Markets Authority (CMA) launched a merger review into the deal on 12 January 2023.
- The CMA believes that the merger gives rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the supply of multiple types of packed sugar to business to consumer (B2C) customers in the UK.
- As part of its initial Phase 1 investigation, the CMA considered alternative counterfactual scenarios on what would have happened if the merger had not gone ahead. TUKI B2C has faced profitability challenges in recent years. The evidence indicates that Tereos considered various options for the UK business at the same time that they decided to investigate the possible sale of the business. The CMA considers, based on its review of the evidence, that the appropriate counterfactual in this case is the prevailing conditions of competition (namely, that the Target would have continued to compete in the UK B2C markets as an independent competitor).
- Under the Act, the CMA has a duty to make a reference to Phase 2 if the CMA believes that it is or may be the case that a relevant merger situation has been created, or arrangements are in progress or contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
- All media enquiries should be directed to the CMA press office by email on press@cma.gov.uk or by phone on 020 3738 6460.