The spate of proposed deals between major crop protection companies could take longer than expected to complete as European regulators seek to ensure farmers will not lose out.
Last week (28 October) the European Commission opened an in-depth investigation into the proposed acquisition of Syngenta by ChemChina (which includes Adama).
The deal was originally expected to be concluded by the end of this year, but the commission now has 90 working days, until 15 March 2017, to make a decision.
Higher prices, less choice
Its main concerns are that merging a leading crop protection company with one of its main generic competitors could reduce competition in key markets, which in turn may lead to higher prices and less choice for farmers.
The commission is also looking at whether the merger will negatively affect the supply of active ingredients by both companies.
Speaking when the deal was announced Syngenta chief executive officer John Ramsay said it would “ensure continuing choice for growers and ongoing R&D investment across technology platforms and across crops. Our commitment to cost and capital efficiency will remain unchanged.”
A similar commission investigation began in August into the proposed merger between Dow and DuPont, announced last December and originally expected to be completed in the second-half of 2016.
The decision deadline for this is 6 February 2017.
The commission is again concerned the deal could reduce competition, particularly in herbicide and insecticide markets where both companies have a strong portfolio of products, and that this could have an impact on price, quality, choice and product innovation.
But DuPont says the deal will drive value for shareholders and customers and allow more effective capital allocation and innovation.
Meanwhile, Bayer intends to submit a formal application for its plans to buy US firm Monsanto to EU competition authorities “probably” in the first quarter of 2017.
Agreement on the record-breaking US$66bn (£50bn) deal between the two companies was reached in September.
Bayer’s chief executive officer Werner Baumann said the two companies were a perfect fit and that the deal would create a global leader in agriculture.
European Commission merger regulations require it to assess mergers and acquisitions involving companies with a turnover above certain thresholds and prevent those that block effective competition.
Deals that do not pose a competition problem are usually cleared after a routine 25-day review, but others go on to an in-depth (phase II) investigation taking 90 working days.