Commissioner Margrethe Vestager, in charge of competition policy, said: “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”.
The proposed merger would combine Syngenta of Switzerland, one of the main global seeds and crop protection companies, and ChemChina of China, which controls Adama, the largest supplier of generic crop protection products in Europe. The transaction would take place in an industry that is already relatively concentrated.
The Commission’s preliminary concerns
Syngenta and ChemChina, through Adama, each have strong partially overlapping portfolios of crop protection products, including herbicides, insecticides, fungicides and plant growth regulators. These products are used for the cultivation of several of the main crops grown in Europe, including cereals, cotton, corn, fruits and vegetables, oilseed rape, soybean, sugarbeet and sunflowers.
The Commission’s initial investigation identified preliminary concerns in a number of these crop protection markets and suggests that:
- the parties have relatively high combined market shares in many of these markets, and that at least some of each party’s products may compete directly with those of the other;
- Adama may be an important generic competitor of Syngenta in many of these markets;
- for a company that focuses on generic crop protection products, Adama has a broad portfolio of products, wide geographic coverage and good access to downstream distributors.
The Commission therefore has preliminary concerns that the proposed merger could reduce competition on these markets and that this in turn could have an impact on price and choices for farmers.
As well as looking into crop protection markets, the in-depth investigation will also verify whether the merger may negatively affect Syngenta’s and ChemChina’s supply of active ingredients. These are the key chemical input for other manufacturers to make crop protection products.
The transaction was notified to the Commission on 23 September 2016. The Commission now has 90 working days, until 15 March 2017, to take a decision. The opening of an in-depth inquiry does not prejudge the final result of the investigation.
Given the worldwide scope of Syngenta’s and ChemChina’s activities, the Commission is cooperating closely with other competition authorities, notably with the Federal Trade Commission in the US and the antitrust authorities of Brazil and Canada.
Companies and products
Syngenta is a global agrochemical and seeds company with headquarters in Switzerland. Syngenta produces and sells crop protection products, seeds, and lawn and garden products. It is active on a global basis in the research, development, manufacture and marketing of a wide range of crop protection products and seeds.
ChemChina is a diversified Chinese state-owned company. ChemChina is active in the agrochemical sector through its agrochemical division China National Agrochemical Corporation (CNAC), and its wholly-owned subsidiary Adama Agricultural Solutions (Adama). CNAC manufactures and sells chemical products, mainly outside the EEA. Adama is an Israeli company primarily active at global level in the manufacturing and distribution of off-patent formulated products for crop protection and professional pest control. It also sells active ingredients to other crop protection producers.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
In addition to the current transaction, there are four other on-going phase II merger investigations:
– The proposed merger between Dow and DuPont, with a decision deadline on 6 February 2017
– The proposed acquisition by HeidelbergCement and Schwenk of Cemex Croatia, with a decision deadline on 23 February 2017
– The proposed merger between Deutsche Börse AG and London Stock Exchange Group, with a decision deadline on 6 March 2017
– The proposed acquisition of the Greek gas transmission system operator DESFA by the Azeri state oil company SOCAR.