Divestitures preserve competition in U.S. markets for three types of pesticides
China National Chemical Corporation (“ChemChina”) and Swiss global agricultural company Syngenta AG have agreed to divest three types of pesticides, in order to settle Federal Trade Commission charges that their proposed merger would harm competition in several U.S. markets.
According to a complaint filed by the FTC, the merger as originally proposed is likely to cause significant competitive harm in the U.S. markets for three pesticides:
- the herbicide paraquat, which is used to clear fields prior to the growing season;
- the insecticide abamectin, which protects primarily citrus and tree nut crops by killing mites, psyllid, and leafminers; and
- the fungicide chlorothalonil, which is used mainly to protect peanuts and potatoes.
Syngenta owns the branded version of each of the three products at issue, giving it significant market shares in the United States. ChemChina subsidiary ADAMA focuses on generic pesticides and is either the first- or second-largest generic supplier in the United States for each of these products.
The complaint alleges that without the proposed divestiture, the merger would eliminate the direct competition that exists today between ChemChina generics subsidiary ADAMA and Syngenta’s branded products. The merger would also increase the likelihood that U.S. customers buying paraquat, abamectin, and chlorothalonil would be forced to pay higher prices or accept reduced service for these products, the complaint states.
The proposed settlement requires ChemChina to sell all rights and assets of ADAMA’s U.S. paraquat, abamectin and chlorothalonil crop protection businesses to California-based agrochemical company AMVAC.
Further details about the consent agreement – which includes an asset maintenance order and allows the Commission to appoint a monitor – are set forth in the analysis to aid public comment for this matter.
Competition enforcement agencies around the world reviewed this transaction. Commission staff cooperated with antitrust agencies in Australia, Canada, the European Union, India, and Mexico, often working closely with their staff to analyze the proposed transaction and potential remedies, and reaching outcomes that benefit consumers in the United States.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 2-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through May 4, 2017, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
NOTE: The Commission issues an administrative 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. 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 $40,654.
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