(Corrects company description to clarify it does not produce sugar anymore.)
(Alliance News) - A study by the UK Competition & Markets Authority found that the Tate & Lyle Sugars acquisition of Tereos UK & Ireland could lead to a "substantial lessening of competition."
Back in November, Tate & Lyle, a London-based provider of food and beverage ingredients and solutions, agreed to purchase the Tereos UK site in Normanton, West Yorkshire, but it was said that the finalisation of the transaction was subject to approval from the CMA.
According to the CMA, Tereos and Tate & Lyle only face competition from one other company, British Sugar, in the supply of packed sugar to a range of businesses, including supermarkets.
"The loss of competition from the deal could lead to supermarkets paying more for packed sugar and shoppers could see higher prices for packs of sugar on shelves as a result," the CMA explained.
Tate & Lyle and Tereos now have five working days to offer solutions which fully resolve the CMA's competition concerns, otherwise it will refer the deal to an in-depth phase 2 investigation.
Senior director of mergers at the CMA, Sorcha O-Carroll, said: "The supply of sugar to grocery retailers in the UK is already highly concentrated. This deal would bring together two of the three players in the UK sugar sector, reducing competition and choice further for people and businesses.
"It's now up to [Tate & Lyle] and Tereos to find a way to address our competition concerns to avoid the deal being referred to an in-depth Phase 2 investigation."
Shares in Tate & Lyle closed 0.7% lower at 591.41 pence each in London on Friday.
By Sabrina Penty, Alliance News reporter
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Tate & Lyle (TATE)
