Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Senator Grassley urges agencies to collaborate on review of proposed agriculture mergers, (Aug 22, 2016)

By Linda O’Brien, J.D., LL.M.

Due to waves of consolidation in the agricultural biotechnology and seed industry in recent years, the convergence of two proposed transactions "will have an enhanced adverse impact on competition in the industry and raise barriers to entry for small companies, said Senate Judiciary Committee Chuck Grassley (R.-Iowa) in a letter sent to the FTC and Justice Department Antitrust Division last week.

In December 2015, Dow Chemical and DuPont announced their agreement to combine to form the world's largest integrated crop protection and seeds company. China National Chemical Corp. (ChemChina) agreed to acquire Swiss agriculture chemical producer Syngenta AG in February 2016.

The merger of Dow and DuPont has been referred to the Department of Justice, while ChemChina’s acquisition of Syngenta has been referred to the FTC for antitrust review.

In the letter, Grassley urges the Justice Department and FTC to work together in their analysis of the state of the agricultural biotechnology and seed industry to ensure that the "multiple proposed transactions under consideration do not substantially lessen competition and aggravate an already concentrated industry." The transactions involve the same underlying market and Grassley expressed concerns that "further concentration in the industry will impact the price and choice of chemicals and seed for farmers, which ultimately will impact choice and costs for consumers."

Grassley noted that the vertical integration of traits, seeds, and chemicals would make it more difficult for small biotechnology companies, independent crop producers, and independent crop input companies to compete. Further consolidation also would "diminish critical research and development initiatives, which drive innovation and technological advances in the industry."

"Because of the complex nature of this industry, it is important that these transactions not be reviewed in isolation," Grassley observed. He encouraged the antitrust agencies to "collaborate, as appropriate, with input from the Department of Agriculture, in their analysis of the agricultural biotechnology and seed industry and the impact of these proposed transactions to ensure that adequate competition is preserved in this important sector of our economy."

Companies: Dow Chemical Co.; E.I. du Pont de Nemours and Company; Syngenta AG; China National Chemical Corp.

News: AcquisitionsMergers Antitrust AntitrustDivisionNews FederalTradeCommissionNews