ChemChina’s $43bn Purchase of Syngenta Cleared by Australian Competition Regulators

09 Dec 2016 --- ChemChina’s proposed $43bn acquisition of Syngenta will not be derailed by Australian competition regulators, who have green-lighted the deal saying it had no competition concerns.

Australia’s Competition and Consumer Commission (ACCC) had been scrutinizing the deal, the biggest ever foreign takeover by a Chinese company, as ChemChina owns a subsidiary, Adama Agricultural Solutions (Adama), which competes with Syngenta in Australia as they both supply crop protection products such as insecticides, herbicides, and fungicides.
However, regulators found there was no concerns, as ChemChina would still face competition from Bayer, BASF, Monsanto, Dow and others.

“The ACCC found that ChemChina would continue to face competition in the supply of crop protection products from a range of proprietary and generic suppliers such as Bayer, BASF, Monsanto, Nufarm, Dow, DuPont, and FMC,” ACCC chairman Rod Sims said.

“Importantly, the ACCC also took into account the complementary nature of the two businesses. Syngenta is focused on research and development to bring new patented chemicals to market. Adama focuses on generic off-patent chemicals.”

“Generic chemicals are more prevalent in Australia than in many other countries, and there is a large number of suppliers. Bringing new generic chemicals to market is often cheaper and quicker in Australia than, for example, in the European Union, due to lower regulatory barriers,” Sims added.

While receiving backing from Australian regulators, the proposed acquisition of Syngenta – part of wider consolidation across agrochemical companies in the sector – is being investigated by the European Commission amid concerns a merger could reduce competition in the market and impact on costs for farmers.

The probe was launched to assess whether the deal is in line with EU Merger Regulation and if it may reduce competition in crop protection products and the supply of certain input chemicals.

Syngenta has said regulatory approval for its takeover by ChemChina will be delayed until the first quarter of next year, as regulators demand extra information to ensure they can green-light the deal.

The deal has received clearance from the US national-security regulator.