Brussels cleared the $140bn merger of Dow Chemical and DuPont’s global businesses the the first of three megadeals that will reshape the global agri-chemical industry, after the companies agreed to sell major parts of DuPont’s global pesticide business to alleviate watchdog concerns.
Dow and DuPont agreed to sell almost all of DuPont’s global R&D organisation to mitigate Ms Vestager’s main competition concern, that there will be continued innovation in crop protection products – the chemicals farmers use to kill pests.
Most of DuPont’s existing pesticide business will also be sold, along with two of Dow’s petrochemical manufacturing facilities, as together the companies would be too powerful in these markets.
Margrethe Vestager, EU competition commissioner, has approved the first agribusiness merger – the trio are together worth nearly $250bn – that she will consider this year, despite concerns from some consumer groups and politicians about increased concentration in the consolidated global market.
Regulators will decide on the other two mergers – ChemChina’s $44bn purchase of Syngenta and Bayer’s $66bn purchase of Monsanto – later this year.
Ms Vestager said:
Pesticides are products that matter – to farmers, consumers and the environment. We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment. Our decision today ensures that the merger between Dow and DuPont does not reduce price competition for existing pesticides or innovation for safer and better products in the future.
Opposition from European farmers to the mergers has been tempered by a concern about the time it takes to approve new products in Europe.
Robert de Graeff, senior policy officer at the European Landowners’ Organisation, said:
While Europe’s farmers have some concerns over these mergers in terms of competition, these are outweighed by our need for new and better crop protection tools with smaller impacts.
We have full confidence in the coming decisions of the European Commission and look forward to a new era of research and innovation which will benefit farmers and consumers.
European antitrust clearance was regarded as a significant hurdle to the deal and while regulators in the US and China are still considering the deal, Monday’s approval is an important milestone in meeting executives’ plan to close the transaction before July.
The merger was first announced in December 2015.The European watchdog started its investigation in June 2016 and needed to complete its in-depth probe and either approve or block the deal by 4 April.