The Competition and Markets Authority (CMA) announced yesterday it has provisionally approved T&L Sugars’ (TLS) acquisition of Tereos UK & Ireland’s (TUKI) retail sugar business, which was announced in November last year.
TLS is a producer which refines and distributes sugar and related products, including under the Tate and Lyle brand, to supermarkets and other businesses such as wholesalers, hotels, and cafes in the UK. TUKI’s B2C unit sources sugar from its Europe-based parent company Tereos SCA 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.
The CMA referred the deal to an in-depth probe in March after a Phase 1 investigation suggested that the transaction could result in higher sugar prices for UK shoppers due to a “substantial lessening of competition”.
In a statement yesterday, the regulator said it had 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 evidence revealed that Tereos’ UK retail business had been making losses over a sustained period of time despite a range of efforts to improve its financial performance. Tereos began a sale process for the business in late 2022, with the evidence showing that there was no other alternative and less anti-competitive purchaser for the business besides TLS.
As a result, the CMA found that, without the deal going ahead, the most likely outcome was that Tereos’ UK retail business would close. Since closure would also result in a loss of competition absent the merger, the regulator has provisionally decided to clear the deal.
Richard Feasey, chair of the CMA’s independent inquiry group carrying out the Phase 2 investigation, said: “We have carefully considered a broad range of evidence, including detailed examination of the financial performance of Tereos’ UK retail business, and the steps taken by Tereos to improve its performance.
“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 is seeking responses to its provisional findings by 27 August, with a final report set to be published by 5 September.
NAM Implications:
- A Hobson’s choice dilemma for the CMA.
- And given the inevitability of Tereos having to close if T&L are not permitted to take over the business…
- …then the CMA and T&L have a joint interest in making this work.
- i.e. agreeing on a set of ground rules to be followed to the letter should help.
