Fears have been raised that the price of sugar could rise if a new trade deal is allowed to go ahead.
The competition watchdog has said it could block a tie-up between two major sugar companies if they cannot allay its concerns that the deal could lead to higher prices for customers.
The Competition and Markets Authority (CMA) said it believed competition could be harmed by brand maker Tate & Lyle's plan to buy brand maker Whitworths.
T&L Sugars (TLS), the company behind Tate & Lyle, announced in November its plan to buy Tereos' business-to-consumer packaged sugar unit in the UK and Ireland.
The deal could “lead to a substantial lessening of competition”, the CMA said, as it gave the two companies five working days to offer solutions or face a second phase of investigation by the watchdog.
TLS refines and distributes sugar and similar products to supermarkets, wholesalers, hotels and cafes in the United Kingdom.
The part of Tereos that plans to buy packets and distribute sugar from its factory in Normanton, West Yorkshire, to UK buyers. One of its brands is Whitworths.
According to the CMA, there is only one other competitor supplying packaged sugar to many businesses, including supermarkets. That competitor is British Sugar, a sister company of Primark.
There are concerns that the agreement could drive up prices for consumers (PA)
(PA File)
Supermarkets could end up paying more for sugar, which could increase prices on shelves for customers, if the deal goes ahead, the CMA said.
“The supply of sugar to food retailers in the UK is already highly concentrated. “This deal would bring together two of the three players in the UK sugar sector, further reducing competition and choice for people and businesses,” said CMA senior director of mergers Sorcha O’Carroll.
“It is now up to TLS and Tereos to find a way to address our competition concerns to prevent the deal from being referred to an in-depth Phase 2 investigation.”
