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.
For more information, visit the Tate & Lyle / Tereos merger inquiry page.
Notes to editors:
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TLS is a sugar producer which refines and distributes sugar and related products, including under the Tate and Lyle brand, to supermarkets and other businesses such as grocery wholesalers, hotels and cafes in the UK.
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Tereos’ UK retail business (known as its ‘business to consumer’ business) sources sugar from its parent company, Tereos, and uses a facility in Normanton (West Yorkshire) as a packing and distribution site to sell packed sugar in the UK, including under the Whitworths brand.
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In Phase 2, the CMA may clear a transaction if it considers that, absent the merger, the most likely outcome would be that one of the merger firms would have exited the market. To decide whether that is the case, the CMA will use the following framework of cumulative conditions: (a) the firm is likely to have exited (through failure or otherwise); and, if so (b) there would not have been an alternative, less anti-competitive purchaser for the firm or its assets to the acquirer in question.
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Under the Enterprise Act 2002, the CMA has a duty to make a reference to Phase 2 if the CMA believes that it is or may be the case that a relevant merger situation has been created, or arrangements are in progress or contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any markets or market in the United Kingdom for goods or services.
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For media enquiries, contact the CMA press office on 020 3738 6460 or press@cma.gov.uk
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All enquiries from the general public should be directed to the CMA’s General Enquiries team on general.enquiries@cma.gov.uk or 020 3738 6000.