Competition and price hike fears as EC ponders major sugar industry takeover

By Oliver Nieburg

- Last updated on GMT

Competition and price hike fears as EC ponders major sugar industry takeover

Related tags: European union

The European Commission has launched an in-depth investigation over the proposed acquisition of the world’s second largest sugar trader ED&F MAN by Europe’s largest sugar producer Südzucker as it fears it could impact competition in Central Europe and lead to price hikes.

German company Südzucker is looking to acquire a stake of the share capital of UK sugar trader ED&F MAN as well as veto rights which would give it sole control.

Impact on sugar prices and Central Europe

The Commission opened the inquiry following a preliminary investigation that found the takeover could lead to high combined market shares for the supply of refined sugar, which may affect Italy and Greece.

It also said the acquisition could drive up prices for consumers and negatively impact Südzucker’s rivals’ access to cane sugar as ED&F MAN also imports raw cane sugar into Europe.

Joaquín Almunia, Commission vice president for competition policy said in a release: “The Commission has a duty to be vigilant as this is an important food ingredient and there are already few players in a market that is concentrated and with high entry barriers.

“Recent price increases also show a need to ensure that the small margin for competition is not further reduced,"​ he added.

The Commission was made aware of the proposed acquisition on 19 September. Both parties submitted remedies as part of a first-phase review, but this was not enough to alleviate the Commission’s reservations on the takeover’s effect on competition within Central Europe.

Dominik Risser, spokesman for Südzucker told this site: “We are hopeful that the acquisition will be allowed by the Commission.”

The Commission was contacted but declined to comment further.

Background

ED&F MAN has over 4,000 employees in 50 countries worldwide. In 2010 it handled about 8.5m tonnes of sugar.

Südzucker reached an agreement with ED&F Man earlier in May this year to acquire a 25% in the company for €187.6 million.

The company will hope the acquisition will help it build upon operating profit of €347m in the first half of 2011, a rise of 23% on the previous year.

The Commission has until 23 March 2012 to reach a decision.

Related topics: Policy

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