Major food companies allege U.S. sugar producers colluded on price

Futures for raw sugar delivered to U.S. ports often trade at more than double a global benchmark for raw sugar ready for export. Photo by Elena Radu/Getty Images

Article content

General Mills Inc., Mars Inc. and McKee Foods Corp. joined a growing list of food manufacturers and grocers in antitrust litigation that alleges top United States sugar producers colluded to inflate prices for the sweetener used in many of the snacks and drinks Americans consume every day.

Article content

In a lawsuit filed in Chicago federal court, the companies claim the vertically integrated producers American Sugar Refining Inc. and United Sugar Producers & Refiners effectively coordinated by reporting “competitively sensitive” data pricing and sales to an independent market analyst, Commodity Information Inc., which then published the information to sugar company subscribers.

Article content

Article content

Article content

The suit against the producers, who control the bulk of U.S. sugar refining, is the latest to challenge prices in the heavily consolidated industry, which has long benefited from government policies that restrict imports. General Mills, Mars and McKee Foods claim sugar producers maintained “a shared, real-time understanding of each other’s pricing, sold positions, and forward strategies” that amplified the anti-competitive effects of existing policies.

Article content

Marianne Martinez, a spokeswoman for American Sugar Refining, rejected the claims Tuesday. She said the suit, which was filed Friday, “repackages the same baseless allegations that have been pending for approximately two years. It’s simply additional plaintiffs’ lawyers peeling away parties who were already represented in the pending litigation. As with the earlier case, the facts don’t support their allegations, and we will demonstrate that as we defend this case.”

Article content

High U.S. sugar prices have long been a pain point for food companies that use the sweetener in everything from peanut butter to pasta sauce, arguing that paying a premium for the globally abundant crop raises costs for consumers and drives food manufacturing abroad. U.S. consumers also pay higher prices for retail sugar, including American Sugar Refining’s Domino brand.

Article content

Article content

Futures for raw sugar delivered to U.S. ports often trade at more than double a global benchmark for raw sugar ready for export.

Article content

Article content

Consolidation in agriculture — including the egg and meatpacking industries — has been a focus of separate lawsuits and government investigations at a time when inflation is a major concern for voters ahead of this year’s midterm elections. But the reasons for high food costs vary, from the jump in fuel costs to unusual weather. For sugar, they’ve also been affected by declining domestic processing capacity and a long-running system of import restrictions.

Article content

Lawsuits filed by other food makers and grocers have been consolidated before a federal court in Minnesota, where a judge last year allowed antitrust claims to continue against American Sugar Refining and United Sugar but not against some smaller producers.

Article content

Supermarket chains including Albertsons Cos. and other food companies including Mondelez International Inc. filed similar complaints against the sugar companies and Commodity Information earlier this year.

Article content

General Mills declined to comment on its lawsuit. Mars and McKee Foods didn’t immediately respond to requests for comment.

Article content

Article content

Article content