The two companies and two merchants, who were also in on the deal, held a total of 27 meetings to discuss prices. Together they controlled around 90 per cent of Britain's white granulated sugar market.
British Sugar, the instigator of the cartel, bore the brunt of yesterday's Commission action, being fined pounds 28m, as opposed to Tate & Lyle's pounds 5m, reduced because of its co-operation. The two distributors, Napier Brown and James Budgett, were fined pounds 1.2m each.
British Sugar said it would appeal against the EC decision. The company said in a statement that it had "vigorously defended" its case. The company maintained that "that there had been no effect on prices" as a result of the events investigated by the EC. Tate & Lyle was unavailable for comment.
Yesterday's fines end a saga of price manipulation which began with an attempt by British Sugar to slash prices and drive others out of the market.
In 1986 British Sugar found itself under financial pressure and switched tactics, instigating a meeting with its rival, Tate & Lyle, which took place on 20 June 1986. The object, the Commission said, was "to replace this price war by a collaborative strategy of higher pricing with its competitors".
By the end of 1986 the two sugar producers had been joined by two merchants, Napier Brown and James Budgett, and systematic discussion continued until 2 July 1990.
During meetings the firms discussed the figures they aimed to pay for industrial sugar and the prices they would charge for products, including the discounts which would be given to big retail customers.
The merchants held talks about the industrial price for sugar, while Tate & Lyle and British Sugar colluded over retail prices.
In a statement yesterday the Commission said that even if it could not prove that specific prices were fixed, the talks "led to an atmosphere of mutual certainty as to the participants' intentions concerning their future pricing behaviour.
"Each of them could reply, if not on the precise price levels of the other participants, at least on their intentional pursuit of the collaborative strategy of higher pricing".
A Commission source said yesterday that it was impossible to estimate how much the consumer had lost because prices had first been artificially reduced by British Sugar, then hiked. Nobody could judge the real market price in the mid and late 1980s, he said.
The cartel came to light after an admission from Tate &Lyle, which wrote two self-incriminating letters to the Office of Fair Trading. That resulted in an action in the Restrictive Practices Court against British Sugar and Tate & Lyle in December 1996.
The OFT copied the letters to the Commission which said yesterday that they contained "decisive evidence of the cartel's existence and allowed the Commission to intervene in this case".
The penalties fall well below the maximum fines imposed for breach of European competition rules. Last month the Commission imposed a pounds 191m fine on 16 companies which operated a price-fixing cartel on transatlantic container shipping.Reuse content