Beginning of the trial on the merger of the sugar industry. What’s at stake? -Agweek
WILMINGTON, Del. — A dispute over whether one sugar company should be allowed to buy another is set to begin Monday, April 18 in Delaware. While the major players are on the East Coast, it is of interest to sugar beet growers nationwide and particularly in the Red River Valley of Minnesota and North Dakota.
Here’s what you need to know:
The applicant: The case was brought in the fall of 2021 by the US Department of Justice, which is suing to stop consolidation within the sugar industry.
The accused : United States Sugar Corp., United Sugars Corp., Imperial Sugar Co. and Louis Dreyfus Co.
US Sugar wants to buy Imperial Sugar, the two cane companies. US Sugar is already part of a sugar marketing partnership called United Sugars. Louis Dreyfus is an international company which is the parent company of Imperial Sugar.
Why is this important for the Red River Valley? United Sugars is why. American Crystal Sugar, based in Moorhead, Minnesota, and Minn-Dak Farmers Co-op, based in Wahpeton, North Dakota, are also part of United Sugars. Both American Crystal and Minn-Dak are owned by Red River Valley sugar beet growers. Wyoming Sugar is also part of United Sugars.
Why the Fed is suing: The federal government tries to prevent monopolies within an industry to ensure fair competition and prevent price gouging that will hurt consumers.
US Sugar is based in Florida, where it has a large refinery. Imperial Sugar has a refinery in neighboring Georgia near the port city of Savannah. The Department of Justice said allowing the merger of two major sugar distributors, both in the Southeast, would be bad for consumers in that region.
In addition, United Sugars’ four partner companies already account for 43% of the sugar market and the Justice Department lawsuit noted the “comfortable” relationship between the sugar companies.
Defense: US Sugar claims that by buying Imperial, it can upgrade Imperial’s facilities, making it more efficient and able to produce sugar more cheaply. He also says that by owning two refineries, he can keep one running even if the other has to shut down (for a hurricane, for example), ensuring a steady flow of sugar to consumers.
He also indicates that there is a lot of competition from other sugar sellers, that the federal government does not understand the sugar market, and that the United States Department of Agriculture is well positioned to ensure fair prices in the sugar industry.
Other arguments in favor of the deal could come out at trial.
Why is the trial in Delaware? The lawsuit was filed in Delaware because US Sugar, although headquartered and has a refinery in Florida, is incorporated in Delaware and Louis Dreyfus, a Dutch company which is the parent company of Imperial Sugar, is incorporated in the United States in Delaware. Many companies incorporate in Delaware due to favorable tax laws in the state. The defendants requested a trial in the Southeast, but Judge Maryellen Noreika upheld it in Delaware.
Is there a jury? No, it will be a trial run with Judge Noreika making the decision. The judge also limits each party to 2 p.m. to make their opening and closing arguments, questioning of witnesses and arguments on evidence.