As per certain conditions set out by the European Commission, the Bureau agreed the transaction would result in a substantial lessening or prevention of competition and a decrease in innovation in the supply and development of certain crop protection products and specialized packaging plastics.
To address these concerns, DuPont has agreed to sell a significant part of its global herbicides business and R&D branch to FMC Corporation, a US based chemical technologies company.
The sale includes DuPont’s Canadian activities in cereal crops herbicides and PrecisionPac, a herbicide dispensing system among Canadian farmers.
“This transaction between two multi-national giants was of interest to Canadian farmers and those involved in this major economic sector,” said John Pecman, Commissioner of Competition, the Canadian Competition Bureau.
“The agreement reached today ensures consumers and businesses continue to benefit from a dynamic marketplace, which offers innovative solutions, increased choice and competitive prices.”
As part of the agreement, Dow will sell its global business of certain specialized plastics products (ethylene acrylic acid copolymers and ionomers), typically used in packaging applications for food, beverages and pharmaceuticals, to SK Global Chemical Co. (SK Global), a new entrant in these markets.
Following an investigation, the Bureau found FMC Corporation and SK Global are acceptable buyers, as they are likely to compete effectively and support innovation in the sector in Canada.
US Department of Justice
As well as the Canadian Competition Bureau The US Department of Justice called for Dow and DuPont to divest multiple crop protection and two petrochemical products to proceed with their merger.
The Justice Department’s Antitrust Division, along with the offices of three state attorneys general, filed a civil antitrust lawsuit on June 15, in the US District Court for the District of Columbia to enjoin the proposed transaction, along with a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns.
The participating state attorneys general offices represent Iowa, Mississippi, and Montana.
The department said, without the divestitures, the proposed merger would reduce competition between two of only a handful of chemical companies that manufacture certain types of crop protection chemicals and the only two US producers of acid copolymers and ionomers, potentially harming US farmers and consumers.
“The Department of Justice conducted a thorough investigation into this merger,” said Andrew Finch, acting assistant attorney general, US Justice Department Antitrust Division.
“As originally proposed, the merger would have eliminated important competition between Dow and DuPont in the development and sale of insecticides and herbicides that are vital to American farmers who plant winter wheat and various specialty crops.
“In addition, it would have given the merged company a monopoly over ethylene derivatives known as acid copolymers and ionomers that are used to manufacture many products, including food packaging.
“The remedies obtained by today’s settlement, including the divestiture of DuPont’s market-leading Finesse and Rynaxypyr crop protection products, will preserve vigorous competition in the sale of these products and benefit American farmers and consumers alike.”
According to the department’s complaint, Dow and DuPont are two of only a few significant competitors in the markets for broadleaf herbicides for winter wheat and insecticides for chewing pests.
DuPont’s Finesse product is the market leading broadleaf herbicide for winter wheat, and Dow recently introduced a broadleaf herbicide called Quelex to compete with Finesse.
DuPont’s Rynaxypyr line of products, sold in the US under the brand names Altacor, Coragen, and Prevathon, are the top selling insecticides for chewing pests, and compete with Dow’s methoxyfenozide products, sold in the US under the Intrepid brand, and Dow’s spinetoram products, sold under the Delegate and Radiant brands.
The complaint alleged loss of competition between Dow and DuPont would result in higher prices, less favorable contractual terms, and a reduced incentive to innovate for each of these products.
It also claimed Dow and DuPont are the only two US suppliers of acid copolymers and ionomers, both of which are high-pressure ethylene derivative products for food packaging and other plastics applications.
According to the complaint, customers for each of these products would have no choice but to accept higher prices from the merged company following the transaction.
Under the terms of the proposed settlement, DuPont must divest its market-leading Finesse herbicide and Rynaxypyr insecticide products to a buyer to be approved by the US.
The proposed settlement further requires Dow to divest its US acid copolymers and ionomers business to a buyer approved by the US to remedy the merger’s harm in the US markets for acid copolymers and ionomers.