Written submissions to the Australian Competition and Consumer Commission (ACCC) relating to two major chemical company mergers close today.
The ACCC is investigating the planned $US130 billion merger of US companies Dow Chemical Company (Dow) and E.I. Du Pont de Nemours and Company (DuPont), and the $US43b acquisition of Swiss-UK agribusiness giant Syngenta by China National Chemical Corporation (ChemChina).
Both deals were announced earlier this year in the latest round of global rationalisation manoeuvres to hit the industry.
For the past few weeks the competition watchdog has been seeking farm sector views on any impact either merger may have on price, innovation, or service in Australia.
Section 50 of the Australian Competition and Consumer Act prohibits acquisitions which are likely to substantially lessen competition in a market.
A provisional decision on both investigations is expected from the ACCC by September 15.
Dow’s diverse chemical business spans plastics, chemicals, agricultural sciences and hydrocarbon and energy products.
DuPont, originally a gunpowder maker, is a global science and technology-based outfit, which researches, develops, produces, distributes and sells a variety of chemical products, electronics, polymers, ag chemicals, seeds, food ingredients, and other materials.
DuPont recently sold its Pioneer Australia Seeds business to New Zealand’s Philip Yates Family Holdings.
State-owned industrial conglomerate ChemChina is active in the research, development and production of chemical products and the fuel industry.
In Australia, ChemChina is already active in the ag market through its 60 per cent holding in Adama, the Israeli-based global supplier of a big range of generic crop protection products.
It’s takeover target, Syngenta, is the world’s largest supplier of crop protection products and a major plant genetics producer, particularly in the vegetable sector and in genetically modified soybean and corn crops.
The ACCC’s investigation is seeking views on whether Adama and Syngenta compete closely in the supply of agricultural chemicals, and the extent of competitive constraint between generic chemical companies, such as Adama, and chemical companies which focus on researching and developing new chemicals.
It will also investigate the potential impact on price, innovation and service levels in agricultural chemicals, or particular agricultural chemical product types, if the proposed acquisition proceeds.
The Dow-DuPont merger involves spinning off the agricultural businesses from the merged companies into a separate global entity.
The ACCC is looking at the likely impact on competition in the local ag sector, particularly Dow and DuPont compete closely in the production of seeds and crop protection chemicals, including insecticides, herbicides, fungicides.
It will also investigate whether Dow and DuPont compete closely in the production of high pressure ethylene derivatives and other performance materials and if the two compete closely in speciality products such as carboxymethylcellulose and semiconductor packaging
The ACCC is welcoming written responses or the chance to discuss the merger inquiries.
Questions can be directed to Braeden Smith (02) 6243 4936.
