The planned merger of China’s state-owned chemical company ChemChina and the Swiss pesticide producer Syngenta can go ahead as it does not violate competition rules, the European Commission (EC) has decreed.
The Commission was satisfied that both Syngenta and ChemChina’s subsidiary Adama had successfully and sufficiently divested their operation so as to not create an unfair competitive situation in Europe, the EC said in a statement on 5 April.
Having analysed the effects of the merger, the EC originally raised concerns that the move would negatively impact competition in the areas of herbicides, insecticides, fungicides and seed treatment products, where the two companies are close competitors.
Together, they would have held a large share of the market with few competitors remaining, which the EC thought would raise prices for European farmers and ultimately consumers.
However, the EC said the parties had been prepared to address the raised concerns.
“They offered to sell off a major share of their overlapping business. This includes a significant part of Adama’s business for pesticides and plant growth regulators, as well as some pesticides owned by Syngenta,” the EC statement read.
Additionally, Adama also agreed to sell off 29 products that it had under development.
The EC confirmed that the divestments would work through a market test and, on this basis, approved the merger transaction.
The Commission cooperated with competition authorities from several countries and the USA, Mexico and China have all also approved the merger.
Chemical equity analyst Bernstein Research said the divestures were likely to be bought by companies such as FMC, Nufarm or Sumitomo, reported petrochemical market news channel ICIS.
The EC drew a parallel between the ChemChina/Syngenta merger and the Dow/DuPont merger, which it approved at the end of March 2017, but noted that Adama was not active in the R&D of new pesticides which gave rise to a different set of concerns between the two transactions.