The CMA had looked into the matter initially after rival sugar supplier Napier Brown had refiled a complaint it originally lodged with the Office of Fair Trading (OFT), which was scrapped in March. The CMA took over its role on April 1.
In a statement, British Sugar said: “British Sugar was confident that it had acted appropriately at all times. British Sugar is pleased that the CMA has elected not to pursue Napier Brown’s complaint, in line with the previous conclusion of the OFT.”
However, Napier Brown’s parent firm, Real Good Food Company, indicated today (September 24) that it would take the matter up with European regulators.
“In a detailed letter to the company, the CMA has thanked us for bringing the matter to their attention and made the point that the case has ‘strategic value’,” RGFC said in a statement. “However, the CMA felt that conducting a full investigation would, taking into account the complexity of the issues involved … take at least two years to conclude.
“They informed us that as they currently have nine live competition enforcement cases, the strategic benefits are outweighed by the risks and resources involved in pursuing the case.”
According to RGFC, the CMA acknowledged that the decision not to prioritise did not mean Napier Brown’s case was not valid. Instead it “does not see it as having sufficient priority within its portfolio of cases at present”, it said. It also stressed that it did not prevent it from deciding to open an investigation in the future.
It speculated that the recent reduction in sugar prices had led to the CMA concluding there was a less urgent competition issue to address. However, it said once prices rose again the issue would become more pressing.
As a result, it stated: “Napier Brown has an outstanding offer to take the complaint back to the European Competition Authorities in Brussels and intends to open discussions with them shortly.”
Napier Brown complained to the OFT about Associated British Foods subsidiary British Sugar abusing its dominant position in the sugar market.
Damaging trading performance
It claimed that British Sugar was charging it prices for sugar that were significantly higher than market levels and that this was damaging the business’s trading performance.
Napier Brown claims to be Europe’s largest non-refining sugar distributor with a 15–20% share of UK sugar supply. There are only two sugar producers active in the UK market: UK beet sugar supplier British Sugar and Tate & Lyle, which refines imported raw cane sugar.
The two firms have been locked in a decades-old dispute. In 1988, the European Commission (EC) found that British Sugar occupied a dominant position in the market for the industrial supply of bulk, white, granulated sugar.
The EC ruled British Sugar had committed multiple abuses of that dominant position, to the detriment of Napier Brown (Case No IV/30.178 Napier Brown – British Sugar (18 July 1988) (‘the 1988 Decision’) (Official Journal L 284, 19/10/1988 P. 0041 – 0059)).
The EC imposed a fine of €3M (£2.47M). The penalty accounted for British Sugar’s “exemplary” behaviour following the receipt of a statement of objections, its offer of undertakings to remedy its misbehaviour and its introduction of a competition compliance programme.