Washington, D.C. — The American Economic Liberties Project kicked off its new amicus program, led by Senior Legal Counsel Katherine Van Dyck, with an amicus brief filed in support of the U.S. Department of Justice’s appeal of the district court decision to allow U.S. Sugar Corporations’ $350 million acquisition of rival Imperial Sugar Company (Imperial Sugar). Economic Liberties argues that that the acquisition cannot be sustained under the incipiency standard created by Section 7 of the Clayton Act, in both the regional and national markets proposed by the parties.

“The U.S. Sugar-Imperial Sugar deal is exactly the kind of merger that Section 7 of the Clayton Act was created by Congress to stop,“ said Ms. Van Dyck. “Such an acquisition will put between 56% and 80% of the refined sugar production market into the hands of just two entities. It will weaken competition and allow United Sugar and its closest competitor, Domino, to collude even more. The district court allowed Big Sugar to take another dangerous step toward monopoly and its ruling should be reversed.”

Economic Liberties argues in its amicus brief that U.S. Sugar’s acquisition of Imperial Sugar creates such high levels of market concentration that it is presumptively unlawful under Section 7 of the Clayton Act, where consolidation should be stopped in its incipiency. Otherwise, even one small merger can trigger a wave of acquisitions that end in oligopoly. The brief posits that the district court ignored the plain language of Section 7, conflated the elements of the Government’s case with the more stringent ones found in the Sherman Act by effectively demanding proof that an actual monopoly would be created, and improperly gave the sugar industry immunity from antitrust laws. The brief also discusses of the risks of over-enforcement versus under-enforcement, arguing that the incipiency standard requires enough competitors to protect against unexpected market disruptions, like those we have seen recently with infant formula recalls and pandemic-fueled supply chain disruptions.

In November of last year, DOJ’s Antitrust Division filed a lawsuit to prevent U.S. Sugar from acquiring Imperial Sugar, stating that the deal was an anticompetitive merger that would harm consumers and businesses alike. Citing the reality that U.S. Sugar and Imperial Sugar are multibillion dollar corporations that control outsized percentages of wholesale sugar sales, DOJ argued that their merger would rid the industry of competition and pose serious threats to food prices and supply chain resiliency.

Despite this evidence, Judge Maryellen Noreika, in the U.S. District Court for Delaware, ignored these arguments largely due to the influence of a senior U.S. Department of Agriculture economist, Barbara Fesco. According to an article from Time, “Her assessment…was based in part on her relationships with executives at the companies involved, who had assured her they had no plans to raise prices.” In a recent letter to Secretary Vilsack, eight organizations, including the American Economic Liberties Project, examined how these actions to undermine the DOJ’s antitrust effort contradicted President Biden’s whole-of-government approach to promoting competition.

Shortly after Judge Noreika entered judgement in favor of the sugar companies, the Department of Justice Antitrust Division filed a notice of appeal and emergency motion for an injunction in the merger case against U.S. Sugar and Imperial Sugar. Economic Liberties’ amicus brief has been filed as part of this appeal.

Read Economic Liberties’ full brief to the District Court here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.