T&L Sugars announced its deal to acquire the UK business from Tereos SCA in November last year, prompting an initial Phase 1 investigation by the CMA.
An independent inquiry group was appointed and scrutinised a wide range of evidence – as well as engaging with customers and competitors – in order to better understand the potential impact of the deal.
The CMA raised concerns that the deal could reduce competition in the UK, as only three businesses – including TLS and Tereos’ UK retail business – supplied the large majority of sugar to customers such as supermarkets and restaurants.
Loss making
However, it was revealed that Tereos’ UK retail business had been loss making over a sustained period of time, despite a wide range of efforts by its parent company to improve its financial performance.
Tereos began a sales process for the business in late-2022, and the evidence showed that there was no other alternative and less anti-competitive purchaser for the business – besides TLS.
The panel provisionally concluded that, without the deal going ahead, the most likely outcome is that Tereos’ UK retail business would close. Since closure would also result in a loss of competition absent the merger, the panel has provisionally decided to clear the deal.
‘Most likely outcome’
Commenting on the decision, Richard Feasey – chair of the independent inquiry group carrying out the Phase 2 investigation – said: “Based on this evidence, we have provisionally found that the most likely outcome is that Tereos’ UK retail business would have closed, absent the deal with TLS and on this basis, we have provisionally decided to approve the merger.
“We now welcome feedback on our provisional findings before we make a final decision.”
The CMA has asked for responses from interested parties to its provisional findings to be sent by 27 August 2024. These will be considered ahead of the CMA issuing its final report, which is due by 5 September 2024.
Meanwhile, the European Commission has approved the acquisition of Dutch agricultural trader Viterra by US agribusiness giant Bunge.
