Not So Sweet: Lawsuit Accuses Sugar Giants of Ramping Up Costs for Consumers

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Allegations Of Price Fixing Against Top Sugar Companies Highlight A Bitter Truth Behind Rising Costs.

A spoonful of sugar might make the medicine go down, but when those spoonfuls cost more than they should the situation isn’t so sweet. Consumers, who claim they have been pushed by some of the country’s biggest sugar manufacturers including United Sugar and Domino’s into spending profligate amounts on sugar, have filed legal action accusing the companies of conspiring together in a price-fixing scheme. 

The lawsuit alleges that the scheme has the companies sharing private business information and working together to artificially inflate the price of sugar, Reuters reports.

Artificial price increases

KPH Healthcare Services, a national provider of pharmaceutical and health care services, filed the proposed class action lawsuit in New York accusing ASR Group, which owns Domino’s, Michigan Sugar and United, of violations of the Sherman Antitrust Act. 

The companies “agreed to artificially raise, fix, maintain, or stabilize prices of granulated sugar,” the lawsuit alleges and shared competitively sensitive, non-public information about prices, volume, sales, and other metrics for granulated sugar to do so.

Reuters reported that ASR Group said “there is no basis for this case, and we intend to vigorously defend it.”

How did the scheme work?

By collectively controlling a majority of the market for granulated sugar in the United States, the companies were able to share “accurate, competitively sensitive, non-public information with each other,” to effectively control the price of sugar in the US. 

“There is no economically rational reason for the producing defendants to share such information. This information was shared for the purpose of enabling defendants to effectuate their agreement to artificially affect prices and avoid competing with one another,” the lawsuit alleges.

Allegations of collusion stack up

Since the New York proposed class action lawsuit was filed, three more antitrust lawsuits have been filed against the sugar producers by food businesses in Minnesota federal court, CBS News reported. All the cases, included one filed by a bakery, accuse the companies of similar practices in price-fixing schemes.

It’s not the first time the sugar industry has faced allegations of anti competitive behavior. In the 1970s, manufacturers had to enter into a consent decree with the Department of Justice to stop price fixing. Reuters reported that in 2021, the Justice Department unsuccessfully sued to stop United Sugar from buying rival Imperial, but ultimately the judge refused to block the $315 million deal.

Legal action not restricted to price fixing

This isn’t the first legal action the sugar companies has faced. In 2018, American Sugar Refining Inc. had to pay $2.35 million after a jury found it guilty of racial bias against a New York employee. Two months earlier, the company had to pay out $13.4 million due to a sex discrimination lawsuit.

Meanwhile, in 2012, the owner of the Domino sugar refinery in Baltimore paid a $200,000 civil penalty and installed pollution controls to settle a federal lawsuit accusing the plant of violating the Clean Air Act. The Environmental Protection Agency had alleged that the refinery at 1100 Key Highway ran its five boilers in a way that exceeded its air pollution permit limits, The Baltimore Sun reported.

KPH Healthcare Services wants to represent sugar buyers from all over the country and is  seeking unspecified triple damages and an injunction against the alleged price fixing scheme.

KPH Healthcare Services is represented by Scott Martin of Hausfeld, Michael Roberts of Roberts Law Firm US, and Joseph Kohn of Kohn, Swift & Graf.

The Sugar Price-Fixing class action lawsuit is KPH Healthcare Services Inc v ASR Group International Inc et al, Case No. 1:24-cv-01941, in the U.S. District Court for the Southern District of New York.

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