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European Commission opens in-depth investigation into proposed merger between Dow and DuPont

The European Commission has opened an in-depth probe to assess whether the proposed merger of Dow and DuPont is in line with the EU Merger Regulation.

The Commission will investigate further whether the deal may reduce competition in areas such as crop protection, seeds and certain petrochemicals.

The companies initially began to obtain merger approval from the EC by submitting the in files seeking regulatory approval 22 June, 2016.

Commissioner Margrethe Vestager, in charge of competition policy, said: “The livelihood of farmers depends on access to seeds and crop protection at competitive prices. We need to make sure that the proposed merger does not lead to higher prices or less innovation for these products.”

The proposed merger between Dow and DuPont, both of the US, would create the world's largest integrated crop protection and seeds company.

It would combine two competitors with leading herbicides and insecticides portfolios and with a strong track record of bringing innovative crop protection and seeds products to the market.

It would also create a leading integrated producer of certain petrochemical products that are widely used in packaging and adhesive applications. The transaction would take place in industries that are already globally concentrated.

Dow and DuPont are strong suppliers of specialty polyolefins, which are thermoplastics derived from petrochemical products and widely used in packaging and adhesive applications. The Commission is investigating the effect of eliminating one competitor and creating new vertical links in these concentrated markets.

DuPont also provides enzymes to the ethanol industry. It is not clear how the merger will impact on its enzyme operations.

The transaction was notified to the Commission on 22 June, 2016. The Commission now has 90 working days, until 20 December, 2016, to take a decision. The opening of an in-depth inquiry does not prejudge the final result of the investigation.

On 20 July, 2016, Dow and DuPont submitted commitments to address some of the Commission’s preliminary concerns. However, according to the Commission, it considered these commitments insufficient to clearly dismiss its serious doubts as to the transaction's compatibility with the EU Merger Regulation. The Commission therefore did not test them with market participants.

Given the worldwide scope of Dow and DuPont's activities, the Commission is co-operating closely with other competition authorities, notably with the Department of Justice in the US and the anti-trust authorities of Brazil and Canada.

 





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