Chemical giants upbeat on merger plan

The merger will be "pro-competitive" they said in a brief response to a statement of issues by the Australian Competition and Consumer Commission (ACCC) on the $169 billion merger proposal and its potential affect on Australian agriculture.

In a joint statement issued by Dow, the companies said they "remain focused on closing the transaction" and continued to work constructively with regulatory agencies, including the ACCC, "in all relevant jurisdictions".

As reported in Farm Weekly, the merger of the preeminent United States-based producers of chemical compounds for agriculture, material sciences and specialty products is also under scrutiny in the United States, Canada and by the European Union.

Based on the current status of agency reviews and "subject to satisfaction of customary closing conditions, including receipt of all regulatory approvals", the companies said they expected the merger to go ahead in the first quarter next year.

The ACCC expects to announce its final decision on the merger proposal on February 2 and the European Commission expects to present its findings four days later.

It is not known when US and Canadian anti-trust regulators intend to declare their views on the merger.

"Dow and DuPont have always expected a thorough review," the companies said in the joint statement.

"The extension (of the review to consider public submissions on the statement of issues) is a common step in the review process for a transaction of this size and scope under ACCC merger regulation.

"We continue to work constructively with regulators in all relevant jurisdictions, including the ACCC, to secure the necessary approvals.

"The companies believe the merger is pro-competitive and good for customers and consumers," they said.

Meanwhile, WAFarmers has confirmed it intends to make a submission on behalf of its members who could be adversely affected by the merger in ways the ACCC pointed to in its issues document.

"A number of issues were raised by the ACCC in its findings, with most of them having the potential to remove competition between the companies in terms of supplying materials to plastics manufacturers in Australia and in the research and development of new crop protection products," said grains section president Duncan Young.

"WAFarmers prepared a submission for the ACCC in August and will submit a response to the (latest) statement of issues.

"We believe producers should all take an interest in this issue considering it may have an effect on the way they run their business, so we encourage all producers - whether WAFarmers members or not - to speak to us about their concerns so we can advocate on their behalf."

Submissions to the statement of issues were due at the ACCC today.

In its statement of issues the ACCC pointed out both Dow and DuPont were two of only a handful of innovation "originators" in Australia conducting expensive and time-consuming research and development aimed at producing patented new-technology crop protection products.

They competed closely and their existing products "overlap in a large number of areas", the ACCC said.

A merger could reduce "competitive tension" in research and development of new crop protection products and slow the rate of introduction in Australia, which could also hinder effective resistance management, it said.

As well, the ACCC said, there was potential for the merged company to unfairly control distribution networks for crop protection products and to engineer crops and protection products specifically to exclude competitors from the market.

The potential for price rises on existing patented products, particularly insecticides for "certain chewing and sucking pests" through "a substantial lessening of competition" also concerned the ACCC.

Also, without competition, there was a potential delay coming onto the market of new canola seed varieties both companies have said they are developing specifically for Australian conditions.

The statement of issues is available on the ACCC website.