By David Brough
LONDON (Reuters) - Napier Brown, a unit of The Real Good Food Company, has complained to Britain's Office of Fair Trading (OFT) alleging an abuse of a dominant position by British Sugar, a major supplier to Napier Brown.
In its third quarter trading update issued this month, The Real Good Food Company said "instability in the sugar market is giving us short-term challenges."
"It is very disappointing that we find ourselves in the position where a major supplier is, in our view, abusing its dominant market position in the supply of sugar to us," said Pieter Totté, executive chairman of The Real Good Food Company.
"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."
British Sugar, a subsidiary of Associated British Foods (ABF)
A spokesperson for ABF said the commercial dispute between the two companies was not a matter upon which it was appropriate to comment.
"The matter was recently considered by the relevant regulator, the OFT who has undertaken a preliminary high level assessment, listened to the respective parties and in February took a decision not to open an investigation."
The OFT has now confirmed to representatives of Napier Brown that the complaint has been referred to the new Competition and Markets Authority (CMA), the successor to the OFT, which begins operating on April 1, 2014, RGFC said.
However, the ABF spokesperson said there had been no "referral", as that term was commonly used, to the new CMA.
"We understand that the OFT will make the CMA aware of the complaint and its decision not to investigate," the spokesperson said. "British Sugar is confident that were the CMA or any other regulator to look at this matter it would find that British Sugar has acted appropriately."
Europe's largest sugar producer, Germany's Suedzucker, said last Tuesday it had been fined 195.5 million euros (160 million pounds) by Germany's cartel office for past collusion with other sugar producers.
(Reporting by David Brough; Editing by David Evans)