Nov. 24 (UPI) -- The Biden administration has sued to block United States Sugar Corporation from acquiring its rival Imperial Sugar Company on accusations that the merger would limit competition and see Americans pay more for refined sugar.
The Justice Department filed the civil lawsuit in the U.S. District Court for the District of Delaware on Tuesday, saying that the merger "would leave an overwhelming majority of refined sugar sales across the Southeast in the hands of only two producers."
"U.S. Sugar and Imperial Sugar are already multibillion-dollar corporations and are seeking to further consolidate an already cozy industry," Assistant Attorney General Jonathan Kanter of the Justice Department's Antitrust Division said in a statement. "This deal substantially lessens competition at a time when global supply chain challenges already threaten steady access to important commodities and goods."
The lawsuit, Kanter said, seeks to preserve that competition and protect the U.S. domestic sugar supply.
The lawsuit follows the Louis Dreyfus Company announcing on March 24 that it had entered an agreement to sell Imperial Sugar to U.S. Sugar in a deal valued at $315 million.
At the time, Mike Gorrell, president and chief executive of Imperial Sugar, said in a statement that he was "confident" the merger would create production, logistics and supply chain "synergies and efficiencies" that would benefit both companies and their customers.
However, the complaint alleges that the two companies compete head-to-head to supply refined sugar to customers across the Southeast, resulting in lower prices, better quality products and reliable service, which would be jeopardized by the deal.
"U.S. Sugar's proposed acquisition of Imperial Sugar will further consolidate an already concentrated market for refined sugar," the Justice Department said, adding that if the transaction is allowed to proceed, the companies "would control the vast majority of refined sugar sales in the region, enhancing the likelihood going forward that they will coordinate with each other and refrain from competing aggressively."
U.S. Sugar told CNBC in a statement that it disagrees with the Justice Department's lawsuit and plans to fight it.
"This transaction will improve supply chain logistics and will not result in higher prices or any harm to customers and consumers," the company said. "We look forward to making our case in court."