Dow-DuPont Merger Gets Conditional EU Green Light

28 Mar 2017 --- The European Commission has given the green light to the Dow and DuPont merger - but only if the companies sell off significant parts of their business to preserve competition. Dow and DuPont received conditional approval from the European Commission for the US$130bn proposed merger yesterday but there are conditions which have to be met to bypass major competition concerns.

This is one of three so-called “mega mergers” in the agribusiness space that environmentalists and campaign groups are concerned will endanger sustainable food production in the future. The European Commission looks likely to clear the way for the Syngenta and ChemChina merger in the coming weeks as well as the proposed Monsanto and Bayer deal.

The EC’s approval is conditional on DuPont and Dow fulfilling commitments given to the Commission in connection with the clearance. The companies believe the outcome of the review is pro-competitive and maintains the strategic logic and value creation potential of the transaction.

As a condition of the merger, DuPont will have to sell off chunks of its global pesticides business, including its research and development group.

Specifically, DuPont will divest its Cereal Broadleaf Herbicides and Chewing Insecticides portfolios. DuPont will also divest its Crop Protection research and development pipeline and organization, excluding seed treatment, nematicides, and late-stage R&D programs, which DuPont will continue to develop and bring to market, and excluding personnel needed to support marketed products and R&D programs that will remain with DuPont. DuPont is currently in negotiations to divest the crop protection assets.

It is not yet known how or if the merger will impact DuPont’s Nutrition & Health business which provides solutions that increase food production while lowering costs and promoting good health by lessening lifestyle diseases.

It is considered a premier specialist food ingredient and food and safety leader, branded as Danisco.

FoodIngredientsFirst have reached out to DuPont for comment.

In addition Dow has already announced an agreement with SK Global Chemical Co., Ltd, to divest its global Ethylene Acrylic Acid (EAA) copolymers and ionomers business. These divestitures are conditioned on Dow and DuPont closing their merger transaction, in addition to other closing conditions, including regulatory filings, local employment law and governance.

More than 200 organizations have raised their objections to the planned mergers of six giant agriculture corporations, claiming that the three resulting companies will concentrate market power and "exacerbate the problems caused by industrial farming – with negative consequences for the public, farmers and farm workers, consumers, the environment, and food security”.

The alliance has sent an open letter to the European Commission.

Adrian Bebb of Friends of the Earth Europe said: “Europe's food and farming system is broken and if giant firms, like Monsanto and Bayer, are allowed to merge they will have an even tighter toxic grip on our food. The mergers are a marriage made in hell and should be blocked by regulators. We need to build a fairer and greener food system out of corporate control.”

Speaking in Brussels yesterday, Commissioner Vestager, said: “Both Dow and DuPont produce a wide range of chemicals. For some of them, the two companies complement each other rather than compete. But their activities overlap significantly in other areas. In particular both sell products used by farmers to control pests that can harm their crops - in other words pesticides.”

“These products affect all of us. They literally affect our daily bread. So they matter to farmers, to consumers and also to the environment. Effective competition in this sector allows farmers to choose from a range of products at affordable prices. It also pushes companies to continue developing new products that meet the high regulatory standards in Europe.”

“And we do need new products in this sector: that are ever safer for people and better for the environment.”

“Our job, as a competition authority, is to make sure a merger doesn't deny Europeans the benefits of competition. That is why we always look at what a merger would change – not just today but also tomorrow. We need to ensure that a merger does not lead to higher prices for existing products or reduce choice. But it is just as important to ensure that it does not reduce innovation for new and better products.”

To contact our editorial team please email us at editorial@cnsmedia.com