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US Sugar Defeats DOJ’s Bid to Block Imperial Sugar Acquisition (2)

Sept. 23, 2022, 5:47 PMUpdated: Sept. 23, 2022, 7:27 PM

The Justice Department lost its bid to block US Sugar Corp.‘s proposed acquisition of rival Imperial Sugar, after a Delaware judge said the deal doesn’t violate antitrust law.

Judge Maryellen Noreika of the US District Court for the District of Delaware wrote in an order released with her one-page ruling on Sept. 23 that the full opinion be kept under seal to protect confidential third-party information.

The DOJ’s Antitrust Division sued to stop the deal in November 2021, arguing it would eliminate competition among refined sugar companies and drive up prices for consumers. US Sugar is the world’s largest vertically integrated cane sugar milling and refining operation, the DOJ said.

The $315 million acquisition would leave only two major sugar producers in the southeastern United States, consolidating an already concentrated industry, the DOJ alleged.

“The people of U.S. Sugar are pleased that today’s court ruling will allow our acquisition of Imperial Sugar to proceed as planned: enabling us to increase our sugar production, enhance the local Georgia economy and benefit our employees and customers,” US Sugar said in a statement.

The parties argued their case over a four-day bench trial in April.

Noreika’s ruling is the second merger review defeat for the DOJ’s antitrust division this week. A Washington, D.C. federal judge ruled Monday that UnitedHealth Group Inc. can proceed with its $7.8 billion acquisition of Change Healthcare Inc.

Allowing the deal to proceed would lead to increase reliance on foreign imports, DOJ antitrust division head Jonathan Kanter said in a statement, adding the DOJ was “disappointed” in the court’s decision.

“Further consolidation in the market for this important kitchen staple will have real-world consequences for millions of Americans,” Kanter said. “We are reviewing the opinion and will determine next steps shortly. We are, as always, grateful for the Antitrust Division staff’s tireless work protecting and promoting competition.”

In a statement, Sen. Elizabeth Warren (D-M.A.) also expressed concern with the ruling.

“This merger would hand two giants 75% of the refined sugar market in the southeast,” Warren said. “We’ll see what the opinion says, but this is a bizarre outcome — and DOJ absolutely must continue taking on anticompetitive mergers that would drive up the price of food.”

The case is United States of America v. United States Sugar Corporation et al, D. Del., no. 1:21-cv-01644, 9/23/22.

(Updated with comment from DOJ and Sen. Warren. )

To contact the reporter on this story: Dan Papscun in Washington at dpapscun@bloombergindustry.com

To contact the editor responsible for this story: Roger Yu at ryu@bloomberglaw.com