The EU has ordered an in-depth investigation into the proposed merger between chemical and seed giants Dow and DuPont, in response to fears the move will adversely affect farmers.
Margrethe Vestager, the EU trade commissioner in charge of competition policy, said the livelihood of farmers depended on access to seeds and crop protection products at competitive prices.
“We need to make sure that the proposed merger does not lead to higher prices or less innovation for these products,” she said.
An initial market investigation carried out by the EU Commission has identified concerns that the creation of the world’s largest integrated crop protection and seeds company would reduce competition which could have an impact on price, quality, choice and innovation.
“Dow and DuPont are important innovators in the crop protection industry, which is characterised by a limited number of global companies with significant R&D capabilities. The transaction would lead to the elimination of one of the few companies able to develop and launch new active ingredients.”
Other potential areas of concern include access to seed technologies.
Dow and DuPont both develop so-called “gene editing” technologies that could be used to materially accelerate the breeding of new seed varieties.
The commission has preliminary concerns that, after the proposed merger, the companies may have fewer incentives to license these technologies to competitors or may make the development of competing technologies more difficult.
A joint statement issued by the two companies said that they had always expected a thorough review of the planned merger and they would work with the relevant regulators.
The two companies remained of the opinion that the merger would be good for customers and consumers, it said.
The merger would initially create a business worth an estimated $130bn, but the intention would be to split the company into three independent, publicly traded companies.
One of these would be a pure-play agricultural business generating estimated revenues of $16bn.