Agribusiness

Dow DuPont merger conditions open door to new R&D player

Grain Central, April 5, 2017

THE EUROPEAN Commission has approved the proposed merger between US-based chemical companies Dow and DuPont, subject to conditions which include DuPont’s divestment of its global R&D division and some of its herbicides.

In delivering the approval, commissioner Margrethe Vestager said the conditions would ensure price competition continued in the farm-chemical sector without reducing innovation, where only five players are globally active in R&D.

“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,” Ms Vestager said.

“Our decision…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.”

Following a report which examined Dow’s and DuPont’s operations, the Commission said competition on price and choice in existing markets would be preserved because “all of DuPont’s products in problematic markets are divested”.

The report said the sale of the underpinning R&D organisation and pipeline ensured the viability and competitiveness of the divested business on a lasting basis, and would enable the buyer “to become a global integrated R&D competitor.”

Under the merger conditions, DuPont herbicides to be spun off were thifensulfuron, tribenuron, metsulfuron, chlorsulfuron, triflusulfuron, lenacil, flupyrsulfuron, ethametsulfuron and azimsulfuron, used in cereal, oilseed rape, sunflower, rice and pasture crops.

The buyer would join BASF, Bayer, Syngenta and the merged entity as a global pesticide R&D organisation involved in the discovery of new active ingredients through to the release of formulated products through national distribution channels.

The Commission found the merger would have significantly reduced competition for some selective herbicides for cereals, oilseed rape, sunflower, rice and pasture in a number of EU member states, as well as insecticides used in horticulture and fungicides used on rice blast.

The merger conditions also required some DuPont insecticides used in horticulture and fungicides used on rice blast to be divested, and Dow would divest significant petrochemical investments in this sector where both companies currently operate.

No rulings were made on either companies’ seed or nematicide divisions.

Source: EU Commission

Both companies operate businesses in Australian agriculture.  In addition to chemical products, Dow Seeds and DuPont Pioneer seeds business operate as subsidiaries of their respective global entities.

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