Napier Sugar and British Sugar in pricing dispute

Non-refining sugar distributor Napier Brown has made a complaint "alleging an abuse of a dominant position by British Sugar", to the Office of Fair Trading (OFT).

Napier Brown’s parent company The Real Good Food Company (RGFC) has said that Associated British Foods (ABF) could face a significant fine if its British Sugar subsidiary is "once again found guilty of abusing its dominant position in the supply of sugar to Napier Brown".

In its third quarter trading update, published earlier this month, the RGFC warned that instability in the sugar market was giving it short term challenges, with the lowering of prices in the sugar market affecting profitability at Napier Brown.

The firm has now revealed that one its challenges is a continuing price dispute with British Sugar. Earlier this month, and following repeated threats, according to RGFC, British Sugar temporarily withdrew supply of sugar to Napier Brown, despite Napier Brown continuing to pay over 95% of the imposed price, while it sought a solution to the dispute, it said.

"Given that British Sugar has a monopoly in the supply of UK beet sugar, Napier Brown had no alternative but to pay the imposed price under duress in order to maintain supply to its customers," said the RGFC.

It added that Napier Brown believed, and had evidence to the effect, that this price is anti-competitive thereby effectively preventing it from competing commercially.

Pieter Totté, executive chairman of RGFC, said: "If British Sugar is allowed to impose a price on Napier Brown, its largest customer and the UK’s largest reseller of sugar, without any reference to market pricing, the consequent impact on UK customers and consumers would be significant."

If RGFC’s complaint is successful it has said that as "a repeat offender" British Sugar could face a substantial fine.

British Sugar had to give certain undertakings to the EU Competition Authorities in 1988 after it had received a fine for abusing its dominant position, undertakings which Napier Brown believes are being breached.

"It is noteworthy that in recent days Pfeifer & Langen GmbH & Co. KG, Suedzucker AG (SZU.XE) and Nordzucker AG were fined a total of €280 million, following a European investigation of European sugar companies," said the firm in a statement published today (21 February).

The Office of Fair Trading has referred the complaint to the new Competition and Markets Authority, the successor to the OFT, which begins operating on 1 April 2014.

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