Acquisition of A.H. Marks Gave Nufarm Monopolies in Chemicals Used on Farms and Lawns
Australian chemical company Nufarm Limited has agreed to sell certain assets and modify some of its business agreements to settle Federal Trade Commission charges that its 2008 acquisition of rival A.H. Marks Holding Limited hurt competition in the U.S. market for three herbicides that are relied upon by farmers, landscapers, and consumers.
Under a proposed FTC settlement, Nufarm will sell rights and assets associated with two of the herbicides to competitors and will modify agreements with two other companies to allow them to fully compete in the market for the other herbicide.
Nufarm’s acquisition of United Kingdom-based A.H. Marks gave Nufarm monopolies in the U.S. markets for two herbicides called MCPA and MCPP-P, which also are known as phenoxy herbicides. The transaction also left only two competitors in the market for a third phenoxy herbicide, called 2,4DB. The three herbicides are widely used in the turf, lawn care, and agriculture industries to eliminate certain weeds safely and cheaply.
MCPA is typically used for cereal crops such as wheat and barley, MCPP-p is used for turf care by landscapers and consumers, and 2,4DB is used for peanut and alfalfa crops. Before the transaction, both Nufarm and A.H. Marks sold each of the herbicides in their raw form to agricultural formulators who used them to make formulated herbicides.
According to the FTC’s complaint, there are no comparable substitutes on the market for these three herbicides, and it is unlikely that any new competitors will enter the market. As a result, Nufarm likely would be able to raise prices for the products to consumers. In fact, the FTC alleges that Nufarm acquired A.H. Marks with the expectation that it would be able to raise prices on phenoxy herbicides after the deal eliminated competition from A.H. Marks.
The proposed order settling the FTC charges will restore competition in the U.S. markets for MCPA, MCPP-P, and 2,4DB by requiring Nufarm to sell A.H. Marks’s MCPA rights and assets to a new competitor, Albaugh Inc., and A.H. Marks’s MCPP-p rights and assets to another new competitor, PBI Gordon Co. In addition, Nufarm will modify its current agreements with The Dow Chemical Company and Aceto Corporation related to MCPA and 2,4-DB, in order to allow them to compete in the U.S. markets for these two herbicides.
The FTC vote approving the complaint and proposed settlement order was 4-0, with Commissioner Edith Ramirez recused. The order will be subject to public comment for 30 days, until August 30, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://ftcpublic.commentworks.com/ftc/nufarm/.
There was extensive international cooperation leading to the resolution of this case. The Australian Competition and Consumer Commission, the Canadian Competition Bureau, and the United Kingdom’s Office of Fair Trading and Competition Commission also reviewed this merger. The FTC worked particularly closely with staff from the Canadian Competition Bureau throughout the investigation to arrive at a proposed settlement order that restored competition in both the U.S. and Canadian markets for MCPA. Throughout their respective investigations, staff from these agencies and the FTC coordinated their enforcement efforts under the terms of the relevant cooperation agreements and the OECD Recommendation on cooperation among its members. The parties reached a separate agreement in the United Kingdom resolving similar concerns.
NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.
Copies of the complaint, consent order, and an analysis to aid in public comment can be found on the FTC’s website at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to firstname.lastname@example.org, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.
(FTC File No. 081-0130)
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