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DOJ Loses Case to Stop Sugar Co. Sale

OMAHA (DTN) -- An attempt by the U.S. Department of Justice to block the sale of a large sugar refiner to a competitor failed Friday when a U.S. district judge in Delaware ruled the merger was not anti-competitive.

U.S. District Judge Maryellen Noreika in Delaware on Friday ruled that privately held U.S. Sugar Corp. can move ahead with its $315 million acquisition of Imperial Sugar Co. from Louis Dreyfus Co. Noreika ruled the purchase did not violate Section 7 of the Clayton Act, an antitrust law meant to stop mergers that could substantially lessen competition or create a monopoly.

Noreika's ruling was brief, as the rationale for her decision was placed under seal "to protect third-party confidentiality information" from being publicly released.

The decision was a blow for the Department of Justice's Antitrust Division, which sued last November to block the sale. In its initial filing, DOJ stated U.S. Sugar and Imperial were two of the three largest sugar companies supplying a region stretching from Mississippi to Delaware. Allowing the sale would put sugar buyers in Southeastern states, "At the mercy of a cozy duopoly," DOJ stated in its complaint.

Neither DOJ officials nor U.S. Sugar's public affairs responded to a request for comment Friday afternoon.

U.S. Sugar, based in Clewiston, Florida, is a member and owner of United Sugars Corp., a cooperative that sells and sets the prices for sugars produced by U.S. Sugar and three other sugar refiners. DOJ described U.S. Sugar as the world's largest vertically integrated sugar miller and refiner.

U.S. Sugar offered to buy Imperial's assets from Louis Dreyfus in March 2021. U.S. Sugar then entered into an agreement with United to market all of Imperial's sugar if the sale was completed.

Justice officials argued that if U.S. Sugar were allowed to acquire Imperial and fold its production into the United cooperative, then United and one other company, American Sugar Refining, would account for nearly 75% of sugar sales across the Southeast, a region that buys roughly 5.5 billion pounds of refined sugar each year. That would further strain supply chains and increase the prices for sugar, as well as foods and beverages.

While the merger primarily affects U.S. Sugar and Imperial in the Southeast, the cooperative United Sugars also includes northern sugar beet producers. American Crystal Sugar Co., Minn-Dak Farmers Cooperative and Wyoming Sugar Co. co-own United Sugars with U.S. Sugar.

The lost case was the second in the same week for the Department of Justice Antitrust Division. Earlier in the week, a separate U.S. District Judge rejected the DOJ's attempts to stop UnitedHealth's roughly $8 billion acquisition of Change Healthcare.

The original DOJ complaint can be viewed at https://www.justice.gov/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN