KPH Healthcare Services a subsidiary of Kinney Drugstores has filed a class-action lawsuit against ASR Group International and other major sugar producers in the U.S. District Court for the Southern District of New York. Co-defendants include Domino Foods Inc., United Sugar Producers and Refiners Cooperative and Commodity Information, a benchmarking service. The plaintiffs allege, “that defendants and co-conspirators artificially inflated the price of granulated sugar from the distributors.”
The case follows unsuccessfully attempts by the Department of Justice to block the acquisition of Imperial Sugar Company by U.S. Sugar Corp. in 2022. Despite courts ruling against the DOJ, it is apparent that current litigation may intensify action against amalgamation especially if it can be proven that consolidation would result in increased prices. This has implications for any segment of the food industry that is moving towards oligopoly.
The DOJ and the FTC are apparently insensitive to the intrinsic benefits of economies of scale. It is justifiable for intervention if collusion in determining price can be proven. Opposing mergers intended to restructure segments of production to improve efficiency should be regarded as unacceptable in a free-market economy.