DOJ seeks to block merger of major sugar companies

The Department of Justice (DOJ) on Tuesday sued two major sugar companies in an effort to block them from merging.

The United States Sugar Corporation, or U.S. Sugar, is seeking to merge with its major rival in the Southeastern part of the country, Imperial Sugar.

However, the DOJ filed a civil antitrust lawsuit in the U.S. District Court in Delaware arguing that the merger would "leave an overwhelming majority of refined sugar sales across the southeast in the hands of only two sugar producers," according to the department's press release.

Assistant Attorney General Jonathan Kanter, who works in the DOJ's antitrust division, said the merger would "eliminate aggressive competition in the supply of refined sugar that leads to lower prices, better quality, and more reliable service."

"U.S. Sugar and Imperial Sugar are already multibillion-dollar corporations and are seeking to further consolidate an already cozy sugar industry," he said, according to the DOJ's release.

"This deal substantially lessens competition at a time when global supply chain challenges already threaten steady access to important commodities and goods. The department's lawsuit seeks to preserve the important competition between U.S. Sugar and Imperial Sugar and protect the resiliency of American domestic sugar supply," he added.

U.S. Sugar said that it plans to fight the lawsuit, according to a report from The Associated Press.

"This transaction will improve supply chain logistics and will not result in higher prices or any harm to customers and consumers," the company said, according to AP. "We look forward to making our case in court."

The companies announced the merger in March.

And the CEO of Imperial Sugar, Mike Gorrell, said the merger would benefit American consumers.

"Imperial Sugar has a strong heritage as a family-owned business and could not be more proud to become part of the U.S. Sugar family," Gorrell said in a March 24 press release. "This move will increase production and reduce costs at Imperial Sugar's refinery, generating significant efficiencies that ultimately will benefit our customers."

U.S. Sugar, the world's largest sugar milling and refining operation, can produce up to 850,000 tons of sugar a year at its refinery plant in Florida. Imperial Sugar owns two plants - one in Kentucky and one in Georgia. The DOJ says competition between the two companies has resulted in lower sugar prices in the Southeastern U.S.

If the merger proceeds, the Justice Department claims that U.S. Sugar would dominate in that region along with competitor American Sugar Refining, better known under the brand name of its product Domino. That would enhance "the likelihood going forward that they will coordinate with each other and refrain from competing aggressively," the DOJ said.

"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 said in a statement. "We will not hesitate to challenge anticompetitive mergers that would harm American consumers and businesses alike."

The Hill has reached out to U.S. Sugar and Imperial Sugar for comment.