On Monday 27 March, the chemicals companies Dow and DuPont, both based in the United States, obtained a conditional green light from the European Commission regarding their merger.
The Commission's investigations raised three types of concern. The first was that the operation would considerably reduce competition on several existing pesticide markets.
The merged entity would have held the highest cumulative market share for several pesticides and would have faced little competition. The Commission found that the merger would have greatly limited effective competition and led to a reduction in choice and increasing prices for certain types of selective herbicides designed for use on cereals, oilseed rape, sunflower, rice and pasture in several states.
The operation would also have considerably reduced competition for products targeting chewing insects and sucking insects in fruits and vegetables and certain other crops in several member states, particularly in southern Europe. Lastly, for fungicides, a sector in which the parties overlap to a lesser extent, the transaction would have reduced competition for rice blast fungicides in certain member states.
The Commission also feared that the transaction would have a significant impact on innovation competition, as the parties would have less incentive to pursue ongoing parallel innovation efforts or to develop and bring to market new pesticides. The European institution's investigation also showed that the merged entity would have cut back on the amount being spent on development of innovative products.
Lastly, the Commission observed that the activities of Dow and DuPont overlap in the petrochemicals sector.
"We were unable to approve the merger in its original form. Therefore, we were only able to give our green light because the companies offered to sell a significant proportion of their activities", Competition Commissioner Margrethe Vestager told a press conference.
The parties will divest much of DuPont's activities in the existing pesticides sector, including its R&D structure.
More than 200 environmental organisations from the field of agriculture and even religious ones wrote an open letter to the Commission this week to oppose the mergers pending in the chemicals sector.
On 12 April, the Commission is expected to return its decision on the ChemChina/Syngenta merger. The planned merger between Bayer and Monsanto has not yet been notified to the European Commission (see EUROPE 11625).
In a press release published on Monday, the organisation Friends of the Earth argues that these mergers will lead to an unacceptable monopoly, with three companies controlling around 70% of the world's agri-chemicals and more than 60% of its commercial seeds. (Original version in French by Élodie Lamer)