The U.S. Department of Justice (DOJ) has lost its appeal against U.S. Sugar’s $315 million acquisition of rival Imperial Sugar, indicating potential challenges ahead for the government in preventing significant food company mergers. The 3rd U.S. Circuit Court of Appeals in Philadelphia upheld a September 2022 decision from a Delaware Federal district court that permitted the merger. Circuit Judge David Porter, writing for a three-judge panel, noted that the government did not present sufficient evidence regarding which markets would be affected by the acquisition.
In addressing the DOJ’s assertion that the merger would reduce competition in the southeastern United States, Porter remarked that the department “defined the relevant geographic market without considering the high mobility of sugar throughout the country.” U.S. Sugar initially agreed to buy Texas-based Imperial from its owner, Louis Dreyfus Company, in March 2021, with the deal closing in November 2022. The DOJ filed a lawsuit in November 2021 to block U.S. Sugar’s acquisition, claiming it would further consolidate an “already cozy sugar industry” and leave the majority of refined sugar sales in the Southeast dominated by just two companies—U.S. Sugar and American Sugar Refining, which markets its products under the Domino brand.
Jonathan Kanter, the assistant attorney general for the DOJ’s antitrust division, stated in 2021 that this merger would likely increase prices and significantly diminish competition amid ongoing supply chain challenges. The court’s decision not to reverse the merger could signal a tough road ahead for regulators attempting to challenge future acquisitions in the commodity sector. Since President Joe Biden took office in 2021, the DOJ has intensified scrutiny on companies within the food industry, particularly in the meat sector, due to concerns over excessive pricing power.
Last year, the department faced setbacks in prosecuting five executives from Pilgrim’s Pride and Claxton Poultry, who were accused of conspiring to manipulate chicken prices. Overall, the DOJ under Kanter has aimed to block mergers that it believes could lead to monopolistic behavior. Kanter informed Reuters in 2022 that if a transaction is likely to lessen competition, “in most situations, we should seek a simple injunction to block the transaction.”
In a separate but relevant note, the market for calcium citrate gel caps has also seen increased attention as health-conscious consumers look for alternatives to traditional dietary supplements. This highlights a broader trend in the industry where companies are exploring various product lines, including those involving calcium citrate gel caps, to diversify their offerings and maintain competitive pricing in an evolving market landscape.