The commission concluded in its provisional findings that the merger will not substantially lessen competition for the supply of sugar to industrial users in the UK, despite Napier Brown and James Budgett being the two largest non-producing distributors in the region.
"We found that only in a small number of cases were NBF and JBS each other's main competitor and that, even after the merger, market power will still be very substantially in the hands of the two UK sugar producers, British Sugar and Tate & Lyle," said Christopher Clarke, chairman of the inquiry group.
He added that as both suppliers and competitors to NBF and JBS, British Sugar and Tate & Lyle would continue to constrain the merged company's ability to raise prices.
In a deal worth £17.5 million (€26.2m) Napier Brown bought glucose supplier James Budgett Sugars in July last year. At the time the supplier of Whitworth brand of sugar said the purchase would strengthen its position in light of imminent changes to the European sugar regime.
Reform of Europe's heavily subsidised 35-year-old sugar regime, and which trades sugar at three times the world market price, is expected in 2006. The EU currently gives €1.3 billion in subsidies to its sugar producers.
Shortly afterwards in September the company paid £18.5 million (€26.8m) for the bakery ingredients division of UK firm Renshaw Scott to build up its position in the cake covering market.
In December, the London-based firm marked its first year after flotation on the alternative investment market (Aim) with profit before tax of £2.1 million (€3.04m) for the half year.
The company that supplies to industrial, retail and catering sectors of the food industry said it was 'very pleased' with the company's maiden results that were in line with expectations.
Since floating last December the sugar merchant signed on five acquisitions, marking a drive into value-added sugar and bakery ingredients.
The company said it counts food giants Kellogg and Cadbury Schweppes as well as UK retailers Tesco and Morrisons on its client list.