Louis Dreyfus Company and Imperial Sugar Company Win Appellate Victory Over DOJ

On July 13, 2023, a three judge panel for the U.S. Court of Appeals for the Third Circuit ruled in favor of Cravath clients Louis Dreyfus Company LLC (“LDC”) and Imperial Sugar Company (“Imperial Sugar”) and unanimously affirmed an earlier decision by the U.S. District Court for the District of Delaware denying U.S. Department of Justice’s (“DOJ”) request for an injunction to block LDC’s sale of the assets and business of Imperial Sugar to U.S. Sugar.

In the suit, DOJ had alleged that the transaction, announced in March 2021, would substantially reduce competition in an alleged “Southeast” region of the United States. In response, Cravath argued, among other points, that DOJ’s theory of the case ignored the commercial realities of Imperial Sugar’s business and those of the sugar industry more broadly. In particular, Cravath argued that Imperial Sugar’s position in the market as a high‑cost, import‑based manufacturer rendered implausible DOJ’s theory that Imperial Sugar acts as a competitive constraint in the market. Cravath further argued that DOJ’s proposed geographic markets did not comport with the way Imperial Sugar views or conducts its business and oversimplified the complexities of the overall market.

On September 23, 2022, following a four‑day bench trial conducted in April 2022, the U.S. District Court for the District of Delaware denied DOJ’s request for an injunction blocking the transaction.

In July 2023, the Third Circuit affirmed the lower court’s determination that DOJ had failed to prove that the acquisition of Imperial Sugar would substantially lessen competition. Specifically, the Third Circuit affirmed the District Court’s finding that DOJ failed to identify the relevant product and geographic markets and thus failed to establish its prima facie case under Section 7 of the Clayton Act, 15 U.S.C. § 18.

The Cravath team is led by partners Christine A. Varney, Timothy G. Cameron, Daniel K. Zach, Peter T. Barbur, David R. Marriott and Michael J. Zaken, practice area attorney Lindsay J. Timlin and associates Serena Candelaria, Perry J. Goffner and Elizabeth H. Shereff.

The case is United States of America v. U.S. Sugar Corp., No. 22‑2806 (3d Cir.).