The sale of Tereos' UK sugar business to T&L Sugars could inflate sugar prices for consumers in the country, the national antitrust regulator has found.

In its preliminary investigation, the Competition and Markets Authority (CMA) said the deal may result in "a substantial lessening of competition".

Explaining the reason behind its decision, the antitrust authority said the two groups only face competition from one other sugar major, British Sugar.

If both companies merge, the sugar market will become all the more "concentrated", Sorcha O’Carroll, senior director of mergers at the CMA said in a statement.

This, in turn, could result in retailers needing to pay higher prices for sugar, the effects of which will roll down to the consumer.

She added: "This deal would bring together two of the three players in the UK sugar sector, reducing competition and choice further for people and businesses.

Both T&L Sugars and Tereos now have five working days to address the watchdog's concerns.

If they do not, the investigation will proceed into its second phase, the CMA said.

"It’s now up to TLS and Tereos to find a way to address our competition concerns to avoid the deal being referred to an in-depth Phase 2 investigation", O’Carroll said.

When asked about its next steps in the process, a T&L Sugars spokesperson told Just Food: “We will be absorbing the CMA feedback over the next few days and deciding how to progress from there.”

Tereos added that it "takes note" of the competition regulator's findings, "and is currently assessing its implications".

The Tereos UK and Ireland branch, TUKI, packs and distributes packed sugar products under the Whitworths brand and private-label goods for sale at its facility in Normanton, West Yorkshire.

T&L Sugars, a subsidiary of ASR Group International, produces a range of sugar and sweetener products under the Tate and Lyle brand and under private labels at its London headquarters. It markets to supermarkets, grocery wholesalers, and foodservice across the UK.

The CMA launched its probe into the deal earlier this year, following the Tereos's sale of its site in Normanton to T&L Sugars in November 2023.

Financial details of the transaction were not disclosed.

At the time, Tereos said in a statement that it was "very pleased that TLS is acquiring the UK site and securing the future for all the experienced employees, the factory and storage facilities. It will enable the B2C market in the UK to maintain the same level of quality and services with a warranty of supply”.

The group added its UK and Ireland operations would continue to run under the TUKI name following the transaction.