Real Good Food Co. does not expect ongoing impact from sugar pricing row

Real Good Food Co. does not expect ongoing impact from sugar pricing row

The Real Good Food Co. will take its complaint against Associated British Foods' sugar business, British Sugar, to Brussels after the UK's competition authority declined to investigate the row.

Real Good Food has accused British Sugar of using its dominant market position to impose "anti-competitive" sugar prices on its wholesale sugar business, Napier Brown.

The company initially lodged a complaint against British Sugar with the UK's Office of Fair Trading, which declined to investigate the case before it was amalgamated into the Competition and Markets Authority. Real Good Food then refiled its objection with the CMA, which in turn refused to look into the matter.

Real Good Food chairman Pieter Totté told just-food today (24 September) the company had pursued the issue with the UK authorities because the European Commission had suggested it might be able to "look at it more quickly".

"We approached the competition authority in Brussels because the regulations that we - and British Sugar - are operating under are European," he explained. "We clearly hope [the Commission] will go in our favour. To some extent, we are not planning on it but if the regulatory framework has changed we need to be aware of that."

Real Good Food will take its complaint to Brussels in the "next few weeks". However, Totté added: "I wouldn't count on this being a fast business".

Real Good Food has said the pricing row with British Sugar dented its profits in fiscal 2013/14 and would also affect the first half of fiscal 2014/15. In August, the group confirmed the dispute led it to pre-tax losses of GBP992,000 (US$1.7m) for the full year to 31 March, compared to pre-tax profits of GBP6.6m the year before.

However, Totté said the company does not expect the issue to have an ongoing impact on Napier Brown in the second half.

"In October, we will enter the new sugar contract year. The sugar contract year ran from October 2013 to September 2014 - that is where the main impact of the problem occurred. We have already made adjustments to mitigate the issue, finding different supply sources," he said.

For its part, ABF said: "British Sugar was confident that it had acted appropriately at all times." A spokesperson for the group told just-food ABF had "nothing to add".