Business Economics Tate and Lyle Oligopoly Collusion Supply and Demand

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Tate and Lyle PLC
Tate and Lyle PLC is an international manufacturer of cane sugar, sucralose and renewable foods and industrial ingredients. Tate and Lyle was founded in 1921 by the merger of two companies: Tate, a sugar refining business started by Sir Henry Tate in 1859, and Lyle, a sugar refining business started by Abram Lyle in 1865. They are currently the only cane sugar refiner in the UK, and the largest in Europe. (Tate and Lyle, 2009) Tate and Lyle operate in four key markets: food and beverage, industrial, animal feed and personal care and pharmaceuticals. The group operates mainly in Europe and North America. It is headquartered in London, UK and employs approximately 5,718 people. Net profit for the year ending March 2009 was £70 million. (Datamonitor, 2009) Tate and Lyle is part of an oligopoly within the UK sugar industry and internationally. British Sugar (a subsidiary of Associated British Foods) is the main UK competition. In 1998, after a ten year investigation by the European Commission, they were both fined for price fixing on the white granulated sugar market in the mid - 1980’s. The commission uncovered 26 price collusion meetings, during this time the two companies accounted for around 90% of the sugar market in the UK. (The European Commission, 1998) Sloman and hinde (2007) describe oligopoly as ‘where there are only a few firms and where entry of new firms is restricted’. There are many differences in the structure of industries under oligopoly and there are many differences in the actions of firms. They may produce identical products, for example sugar, however the majority of oligopolists produce a wide variety of different products as do Tate and Lyle and British Sugar. Oligopoly is characterised by two important features; the interdependence of the firms, with each firm being affected by its competitors decisions, (for example if Tate and Lyle were to lower their prices for sugar, British Sugar may feel the need to...
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