MOSCOW (MRC) -- The European Commission says it has approved Mitsui & Co.’s proposed acquisition of agricultural chemical distributor and formulator Belchim Crop Protection (Londerzeel, Belgium). Approval is conditional on Mitsui’s full compliance with a commitments package it offered to the Commission, according to Chemweek.
Mitsui notified the Commission of the proposed transaction on 15 December.
Belchim and Mitsui each distribute third-party crop protection products and supply their own formulated products for crops such as potatoes, vegetables, and vines, the Commission says. The two companies sell a range of products that are mostly based on off-patent active ingredients. In Western Europe, Mitsui is mainly active in crop protection through its subsidiary Certis Europe (Utrecht, Netherlands).
The Commission's investigation into the proposed deal found that it would have reduced competition in the markets for plant growth regulators (PGRs) and paraffinic oils.
PGRs are used to prevent or control sprouting in stored potatoes. In 2020, the active ingredient chlorpropham was banned by the EU and since then, Mitsui and Belchim have been among very few suppliers that sell, or are about to sell, alternative products to chlorpropham in post-harvest potato PGR markets in Denmark, Germany, Poland, Sweden, and potentially in Finland and Norway, the Commission says. “The transaction would have led to high combined market shares in countries where Mitsui and Belchim compete,” the Commission says. “Also, it would have eliminated competition from Mitsui as a potential entrant in Finland and Norway.” The Commission was, as a result, concerned that this would give rise to higher prices for potato PGRs in those countries.
Paraffinic oils are used to prevent or limit the spread of viruses in seed potatoes and flower bulbs. The Commission's investigation showed that Mitsui is the main supplier of paraffinic oils in the Netherlands. It also found that no suppliers other than Belchim were likely to make a significant entry in those markets in the near future. The Commission says it was concerned that the transaction would remove competition from Belchim and that the merged company would have maintained high market shares in the Netherlands. As a result of the merger, Dutch farmers could have seen higher prices for paraffinic oils, the Commission says.
Mitsui offered two commitments to address the Commission’s concerns. The company proposed to transfer the Mitsui distribution agreement and customer relationships for its potato PGRs in one or two packages—one for Germany and Poland, and the other for the Nordic countries—to one or two remedy takers. If Mitsui cannot transfer the packages within a certain timeframe, it has offered to transfer instead the Belchim distribution agreement and customer relationships for its PGR product under the same terms.
Mitsui also offered to transfer to a remedy taker the Belchim distribution agreement and other relevant data and agreements for its paraffinic oils for virus control in seed potatoes and flower bulbs in the Netherlands. The businesses Mitsui proposed to divest include access to brands and intellectual property, application machinery, and education and training.
“These commitments fully remove the overlaps between Mitsui and Belchim in the markets where the Commission had identified competition concerns,” the Commission says.
As MRC informed earlier, Mitsui Chemicals operated its naphtha cracker normally following a maintenance turnaround. The company resumed operations at the cracker on July 19, 2020. The cracker was shut for maintenance on June 11, 2020. Located in Osaka, Japan, the cracker has an ethylene capacity of 500,000 mt/year and a propylene capacity of 280,000 mt/year.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.
Mitsui Chemicals is a leading manufacturer and supplier of value added specialty chemicals, plastics and materials for the automotive, healthcare, packaging, agricultural, building, and semiconductor and electronics markets. Mitsui Chemicals is a Japanese Chemicals company, a part of the Mitsui conglomerate. The company has a turnover of around 15 billion USD and has business interests in Japan, Europe, China, Southeast Asia and the USA. The company mainly deals in performance materials, petro and basic chemicals and functional polymeric materials.