The UK's Office of Fair Trading has said it has referred the completed acquisition by Napier Brown Foods of James Budgett Sugars to the Competition Commission.

"The OFT believes that a relevant merger situation has been created, and that it may be the case that the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within the market for the supply of sugar to industrial users in the UK," the OFT said.

The merger results in a reduction from four to three of the major suppliers of sugar to industrial users in the UK.

 "This is a merger between two of the four UK suppliers of sugar to industrial customers. Although it is possible that the merger could lead to a 'third force' in the supply of sugar to UK industrial users, the OFT has not been provided with sufficient consistent information to counter the competition concerns identified. Further investigation by the Competition Commission is needed," said Vincent Smith, director of competition enforcement.

In response to the OFT's decision, Napier Brown Foods said it will continue its ongoing cooperation with the competition authorities and remains confident of a successful outcome.

"Napier Brown Foods continues to believe that the acquisition and integration of the two businesses will lead to significant efficiencies and also result in material benefits to both customers and consumers," the company said.