Biden DOJ takes legal action against to obstruct sugar merger, points out supply chain pressure

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Biden DOJ sues to block sugar merger, cites supply chain strain

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The Biden administration on Tuesday took legal action against to obstruct the proposed merger of 2 sugar market giants, arguing that that acquisition would eliminate competitors and raise costs at a time when worldwide supply chains are currently under pressure.

The civil antitrust claim, submitted in federal court in Delaware, intends to stop the United States Sugar from purchasing ImperialSugar The corporations are competitors in the “already cozy” sugar market, stated Jonathan Kanter, assistant chief law officer of the Justice Department’s Antitrust Division, in a news release.

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

U.S. Sugar is a Delaware corporation that’s independently held and headquartered inFlorida Imperial Sugar is owned by Louis Dreyfus, an international farming corporation based in theNetherlands The offer is valued at about $315 million.

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

“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 stated.

Imperial did not right away react to CNBC’s ask for remark.

The DOJ’s newest intervention in a significant market offer contributes to the Biden administration’s record of promoting antitrust enforcement. President Joe Biden’s very first year in the White House has actually been marked by taking aggressive actions to fight business debt consolidation, consisting of by signing a sweeping executive order and by looking for to obstruct or restrict offers and collaborations in markets varying from food to releasing to airline companies.

Earlier in November, the DOJ submitted a claim looking for to obstruct Penguin Random House from getting competitor Simon & & Schuster for almost $2.18 billion.

The DOJ in September took legal action against to obstruct a local collaboration in between American Airlines and JetBlue Airways, declaring the alliance would decrease competitors, lower the quality of service and increase airlines tickets. The providers, which have actually argued that the collaboration will assist them much better complete versus Delta Air Lines and United Airlines, on Monday asked a federal judge to dismiss the fit.

“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 stated in a news releaseTuesday “We will not hesitate to challenge anticompetitive mergers that would harm American consumers and businesses alike.”

U.S. Attorney General Merrick Garland goes to a press conference to reveal that the Justice Department will submit a claim challenging a Georgia election law that enforces brand-new limitations on ballot, at the Department of Justice in Washington, D.C., June 25, 2021.

Ken Cedeno|Reuters

The offer in between U.S. Sugar and Imperial Sugar “would leave an overwhelming majority of refined sugar sales across the Southeast in the hands of only two producers,” the DOJ news release stated. Americans as an outcome “would pay more for refined sugar, a significant input for many foods and beverages,” the DOJ stated.

As the world recuperates from the coronavirus pandemic and customer need boosts, worries of supply chain traffic jams and shortages are likewise rising throughout the economy.

The problem states that if U.S. Sugar obtains Imperial, it would fold Imperial’s production into that of United Sugars Corporation, a cooperative that offers the sugar produced by U.S. Sugar and 3 other refiners. That offer would leave simply 2 business, United and Domino, in control of almost 75% of sugar sales throughout the southeast U.S., “leaving wholesale customers in this region at the mercy of a cozy duopoly,” the problem declares.

“As a result, fragile supply chains would be further strained, and American families would pay more for sugar and many staple food and beverage products,” the claim states.

“This is a straightforward case: the merger of two direct competitors that will result in a highly concentrated market and lead to higher prices for a product that is vital to our country’s food supply,” the problem includes.

“Simply put: this case is not a close call.”

— CNBC’s Leslie Josephs added to this report.

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