The court did not buy government’s argument that the acquisition would give the buyer “roughly 75% of the sugar sales in the Southeastern United States.”

M&A Stories

October 14, 2022


More often today, there is an antitrust risk that the government may try to block an acquisition of a middle market acquisition (buyout transactions between $25 million and $1 billion.)

The deal

The seller in this deal owns a large sugar refinery near the port city of Savannah, Georgia. The seller’s facility refined primarily imported raw sugar. The seller does not own any other sugar refineries, or cane farming or milling assets. (A sugar mill processes sugar cane into raw sugar that is then processed by a refinery).

The buyer grows sugar in Florida and has both a mill and refinery there. The buyer’s refinery produces less than 7% of nationwide capacity

The buyer and seller entered into an asset purchase agreement where the buyer would purchase the seller’s assets, the primary asset being the Georgia sugar refinery for $315 million.

The lawsuit

The United States Department of Justice filed suit in a federal court to block the acquisition. The government claimed that the acquisition would give the buyer “roughly 75% of the sugar sales in the Southeastern United States”, eliminate competition among refined sugar companies and drive up prices for consumers.

The court rejected the court’s argument concluding that an attempted price hike would not stick: “The Government’s proposed geographic markets ignore the commercial realities of the sugar industry in this country — namely, that sugar flows freely and over long distances in response to market forces. The evidence establishes that customers already look beyond the Government’s proposed markets for competitive alternatives.”

Finally, prices would not stick because of the government’s sugar price mechanism: “The supply of sugar in the U.S. is tightly controlled by the federal government, the consequence of which is that sugar prices are artificially held high in this country. Although the USDA prefers to keep the price of sugar high, there are a number of tools at the USDA’s disposal that can easily be deployed to modify the sugar supply (and thus price) in the U.S. As such, …(the buyer’s) … acquisition of … (the seller) … will not happen in a vacuum and must be viewed against the backdrop of the USDA’s intimate involvement with the U.S. sugar industry.

See United States v. United States Sugar Corporation, C.A. No. 21-1644 (MN), United States District Court, D. Delaware, (September 28, 2022).


The government is appealing the decision. Nevertheless, the deal can close.

The Biden administration has recently lost 3 antitrust lawsuits: See

By John McCauley: I write about recent legal problems of buyer and sellers of small businesses.



Telephone:      714 273-6291

Check out my book: Buying Assets of a Small Business: Problems Taken From Recent Legal Battles

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