Dow Chemical and E.I. DuPont can carry out their planned $130 billion merger if they agree to sell off some of their pesticide and petrochemical business, said the Justice Department. Justice’s antitrust division said the divestitures are needed to preserve competition in the ag chemical sector and to prevent creating a monopoly for two ethylene derivatives.
“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,” said Acting Assistant Attorney General Andrew Finch in a statement. The Justice Department said it had cooperated with European Commission regulators in conducting their antitrust investigations of the merger, and that the EU approval on March 27 addressed some of the same concerns that U.S. regulators had.
The Dow–DuPont merger is part of a wave of planned consolidation that could reduce the “big six” companies in agricultural seed and chemicals to a “big three.” Besides Dow–DuPont, mergers would unite Syngenta with state-owned ChemChina and U.S.-based Monsanto with Bayer, of Germany. Monsanto and Bayer would become the largest seed and ag chemical company in the world.
“Clearly, the Trump administration is content allowing our country’s consolidation complex to continue,” said the National Farmers Union, the second-largest U.S. farm group. The NFU said consolidation has drained family farms and rural communities. The merger wave will leave farmers with higher prices and fewer choices when they buy seeds and pesticides, it said.
The Justice Department said the divestitures it proposes “would preserve competition in U.S. markets for broadleaf herbicides for winter wheat and insecticides for chewing pests.” To assure divestiture, Justice, joined by Iowa, Mississippi, and Montana, filed an antitrust suit in Washington along with a proposed settlement that would make the divestitures mandatory.
“Dow and DuPont have already received clearance to merge from Europe, China and Brazil,” said Reuters. “They are now awaiting approval from just a handful of countries, including Canada and Mexico.”
The companies said they expect to close the merger in August, reported Bloomberg. “Dow and DuPont are planning to split the merged company into three within 18 months of closing, with the first spinoff a materials-science company that will retain the Dow name. The other two post-split companies will focus on agriculture and specialty products.”