REG - Competition and Mkts - Merger Update: T&L Sugars / Tereos

Tate & LyleAnnouncement

08/03/2024 08:15

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RNS Number : 1400G  Competition and Markets Authority  08 March 2024

FOR IMMEDIATE RELEASE ON FRIDAY 8 MARCH AT 07H00 GMT

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.

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
(https://www.gov.uk/cma-cases/t-and-l-sugars-slash-tereos-merger-inquiry) case
page.

Notes to editors:

1.   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.

2.   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.

3.   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).

4.   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.

5.   All media enquiries should be directed to the CMA press office by email
on press@cma.gov.uk (mailto:press@cma.gov.uk) or by phone on 020 3738 6460.

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