МОSCOW (MRC) -- Extended reviews stretch timelines for ag megadeals The European Commission announced that it has opened an in-depth antitrust probe into ChemChina's USD43-billion acquisition of Syngenta, the latest indication of potential regulatory resistance to consolidation underway in beleaguered agricultural markets, said Chemweek.
"This deal would lead to the combination of a leading crop protection company with one of its main generic competitors. Therefore we need to carefully assess whether the proposed merger would lead to higher prices or a reduced choice for farmers," Margrethe Vestager, head of EU's competition regulations, says in a press release. The transaction would also take place in an industry that is already relatively concentrated, the statement adds.
Syngenta is one of the main global seeds and crop protection companies. ChemChina controls Adama, the largest supplier of generic crop protection products in Europe.
The escalation to a Phase II review gives the Vestager's office 90 working days—as late as March 2017—to make a ruling. The two companies had originally aimed to close the deal by year-end, but Syngenta conceded on Tuesday that closure could be pushed back until the first quarter of 2017. "In a context of industry consolidation, regulators in the EU and elsewhere have recently requested a large amount of additional information, and we now expect the regulatory process to extend into the first quarter of 2017,” said Syngenta CEO Erik Fyrwald. "ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure."
Syngenta and ChemChina confirmed the review, adding that they "intend to continue constructive discussions with the EU authorities in order to conclude the review as early as possible."
The Commission says its Phase I investigation turned up several preliminary concerns, among them partially overlapping portfolios of crop protection products, including herbicides, insecticides, fungicides and plant growth regulators. Both Syngenta and ChemChina have high combined market share and their products may directly compete. In addition, Adama may be an important generic competitor of Syngenta in many of these markets, the Commission says.
The Commission adds that it is cooperating closely with other competition authorities, "notably with the Federal Trade Commission in the US and the antitrust authorities of Brazil and Canada. The opening of an in-depth inquiry does not prejudge the final result of the investigation, the Commission adds.
The pending merger of Dow Chemical and DuPont, a deal driven in part by the downturn in agriculture markets, is also subject to a Phase II review by the Commission. That review began in August, with a provisional deadline of 6 February for a ruling. Bayer, meanwhile, says it has initiated the process of obtaining the necessary approvals for the USD66-billion acquisition of Monsanto from regulators in the United States and European Union. Bayer has reiterated its expectation that the deal will be completed by the end of 2017.
ChemChina produces special chemical materials, basic chemicals, oil refining, agricultural chemistry, rubber products, and chemical equipment.