Crops News

ChemChina: Syngenta acquisition gets FTC, EU green light

Published:

ChemChina has received approval from the US Federal Trade Commission (FTC) and the European Commission for the proposed $43 billion acquisition of Syngenta, but first both companies must divest some of their pesticide business.

Almost mirroring last week’s EU Commission’s conditional approval for the Dow and DuPont merger, ChemChina and Syngenta have agreed to divest three types of pesticides, in order to settle FTC charges that their proposed merger would harm competition in several U.S.  markets. To win EU approval, ChemChina must divest significant parts of its European pesticide and plant growth regulator business.

According to a complaint filed by the FTC, the merger as originally proposed is likely to cause significant competitive harm in the U.S. markets for three pesticides:

  • the herbicide paraquat, which is used to clear fields prior to the growing season.
  • the insecticide abamectin, which protects primarily citrus and tree nut crops by killing mites, psyllid, and leafminers.
  • the fungicide chlorothalonil, which is used mainly to protect peanuts and potatoes.

Syngenta owns the branded version of each of the three products at issue, giving it significant market shares in the United States. ChemChina subsidiary ADAMA focuses on generic pesticides and is either the first- or second-largest generic supplier in the United States for each of these products.

The complaint alleges that without the proposed divestiture, the merger would eliminate the direct competition that exists today between ChemChina generics subsidiary ADAMA and Syngenta’s branded products. The merger would also increase the likelihood that U.S. customers buying paraquat, abamectin, and chlorothalonil would be forced to pay higher prices or accept reduced service for these products, the complaint states.

The proposed settlement requires ChemChina to sell all rights and assets of ADAMA’s U.S. paraquat, abamectin, and chlorothalonil crop protection businesses to California-based agrochemical company AMVAC.

FTC staff cooperated with antitrust agencies in Australia, Canada, India, the EU, and Mexico, often working closely with their staff to analyze the proposed transaction and potential remedies, and reaching outcomes that benefit consumers in the United States.

In ChemChina and Syngenta’s release, the companies said these approvals represent a major step towards the closing of the transaction, which is expected to take place in the second quarter of 2017.

Any views or opinions expressed in this article are those of the author and do not reflect those of AGDAILY. Comments on this article reflect the sole opinions of their writers.