T&L Sugars Limited (TLS) announced their deal to buy Tereos UK & Ireland's retail sugar business from Tereos SCA (Tereos) in November 2023. The business supplies supermarkets, wholesalers and foodservice customers in the UK.
The Competition and Markets Authority (CMA) referred the deal to an in-depth Phase 2 inquiry, after identifying competition concerns during its initial Phase 1 investigation.
The CMA's initial concerns focused on how the deal could reduce competition in the UK, as only 3 businesses (including TLS and Tereos' UK retail business) supply the large majority of sugar to customers such as supermarkets and restaurants.
An independent inquiry group was appointed and 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.
This evidence revealed that Tereos' UK retail business has been loss making over a sustained period of time, despite a wide range of efforts by Tereos to improve its financial performance. Tereos began a sales process for the business in late-2022, and the evidence showed that there was no other alternative and less anti-competitive purchaser for the business, besides TLS.
As a result, the panel has provisionally found that, without the deal going ahead, the most likely outcome is that Tereos' UK retail business would close. Since closure would also result in a loss of competition absent the merger, the panel has provisionally decided to clear the deal.
Richard Feasey, chair of the 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 welcomes responses from interested parties to its provisional findings by 27 August 2024. These will be considered ahead of the CMA issuing its final report, which is due by 5 September 2024.
