The European Commission has cleared the acquisition of the world’s largest sugar trader ED&F MAN by Europe’s largest sugar producer Südzucker and said it would raise no competition concerns on one condition.
The deal will be approved only if ED&F MAN divests its newly-built Brindisi refinery in Italy to allow adequate competition in the market.
Approval comes after the Commission launched an in-depth investigation last November into the acquisitions’ impact on competition in Central Europe and a potential sugar price hike. The deadline on a decision had been postponed on two occasions after concerns were raised.
Joaquín Almunia, commission vice president in charge of competition policy, said: “The current high prices and scarcity of sugar across the EU make it all the more important to maintain competition on the already concentrated European sugar markets.”
“The divestment of the Brindisi refinery ensures that the merged entity will face a viable competitor in the Italian market," he continued.
Germany company Südzucker, the market leader in Italy, would control over 50% of the Italian market if it were to hold on to the Brindisi refinery, the second biggest raw cane sugar refinery in Europe.
The Commission therefore has required ED&F MAN to divest its interests in the plant in order for the acquisition to go ahead.
“The Commission's investigation confirmed that as regards Italy the market for the supply of sugar to industrial customers remains national. The significant imports into Italy are not a sign of functioning cross-border price arbitrage, but a consequence of the limited Italian production quota imposed by regulation,” said the Commission in its release.
Südzucker reached an agreement with ED&F MAN in May last year to acquire a 25% stake in the company for €187.6m.
The deal was struck as the EU sugar market was experiencing a period of high prices and sugar scarcity.