The proposed merger of Syngenta AG by the China National Chemical Corporation (ChemChina) has been agreed in a deal with the Federal Trade Commission (FTC) in the US.
It has been agreed that the takeover must divest three types of pesticides, in order to settle FTC charges that the proposed merger would have harmed competition in several US markets.
The merger, as originally proposed, would have been likely to cause ‘significant competitive harm‘ in the US markets for three pesticides, according to a complaint that had been filed by the FTC.
These pesticides included:
- The herbicide paraquat, which is used to clear fields prior to the growing season.
- The insecticide abamectin, which primarily protects citrus and tree nut crops by killing mites, psyllid and leafminers.
- The fungicide chlorothalonil, which is mainly used to protect peanuts and potatoes.
A branded version of each of these three products is owned by Syngenta, giving it a significant market share in the US, the FTC said.
ADAMA Agricultural Solutions, which is owned by CehmChina, focuses on generic pesticides; it is either the first or second largest generic supplier in the US for each of these products, the FTC added.
It was alleged in the complaint that, without the proposed divestiture (getting rid of a business interest), the merger would eliminate the current competition that exists between ADAMA’s generic products and Syngenta’s branded products.
The complaint also highlighted that there would have been an increased likelihood that US customers, buying either of the three pesticides, would be forced to pay higher prices or accept reduced service for these products.
Further details about the ‘consent agreement’ are set forth in the analysis to aid public comment for this matter, according to the FTC.
Competition enforcement agencies around the world reportedly reviewed this transaction.
FTC staff are believed to have co-operated with a number of international anti-trust agencies in order to analyse the proposed transaction and potential remedies, as well as reaching outcomes that “benefit consumers in the US”.
The FTC is expected to publish the ‘consent agreement’ package in the Federal Register shortly. The agreement will be subject to public comment for a period of 30 days; this will continue up until May 4. After this date, the FTC is set to decide whether to make the proposed consent order final.