"We go into companies when we have a suspicion that they have violated the competition law - in this case on price fixing," a spokesman for the Dutch competition authority NMa told FoodNavigator.com.
The Diemen-based CSM company that produces sugar, syrups and sweeteners from beet said the investigations would focus on 'possible price arrangements' between CSM Suiker and its competitors and customers.
The price of sugar in Europe moves between the price freely fixed by the market and the price of imports with duties attached from developing countries. Between these two points, companies operating in the sugar sector can play with the figures driven by supply and demand.
Tipped off by third parties, the NMa will now spend months probing CSM Suiker and Cosun for possible evidence of price fixing. "We have to study the material very precisely, a process that can take several months. After this we will issue a formal report on what we have found," the spokesperson added.
The Dutch firms will then have an opportunity to give an opinion. If the NMa finds that they have violated the law, the companies will receive a fine. In separate statements on Wednesday both companies said 'they would co-operate fully' with the Nma.
The world's largest supplier of bakery ingredients, publicly-listed firm CSM moves in four product groups - bakery supplies, sugar confectionery, biochemicals and sugar. In 2003 CSM Suiker accounted for 7.7 per cent of net group turnover of €3.484 billion.
Suiker Unie, a unit of Cosun, is the leading sugar processor in The Netherlands accounting for 62.5 per cent of the 1.12 million tonnes production in 2002/2003, with CSM taking the remaining 37.5 per cent. According to the London-based International Sugar Organisation, in 2002/2003 the Dutch consumed 724,000 tonnes of sugar.
The EU is one of the world's largest sugar producers and consumers. Sugar beet is cultivated on roughly 3 per cent of the EU's arable land, while cane sugar is grown on over 40,000 hectares in Spain and the French overseas departments. Raw sugar imports correspond to 1.7 million tonnes produced by the ACP (African, Caribbean and Pacific) countries. Data for 2000/1 provided by European sugar association CFES shows that the European sugar industry is comprised of 56 companies and 143 factories and provides an income for 1 million people, directly or indirectly.