Approval of Dow and Dupont’s merger is contingent on post-merger divestiture of methsulfuron, azimsulfuron, chlorantraniliprole, Indoxacarb and cyantraniliprole registration and production in China;
Chinese authorities have also stipulated a 5-year’s pricing control and non-exclusive protection clause covering bensulfuron, carfentrazone-ethyl+bensulfuron, pyrazosulfuron, sulfoxaflor, bensulfuron, penoxsulam, cyhalofop-butyl to maintain moderate competition in China’s market;
On 29 April 2017, Chinese Ministry of Commerce (MOFCOM) released Announcement 25 of 2017 regarding the merger of Dow Chemical and Dupont. MOFCOM started the anti-monopoly probe in March 2016 and has deemed that the merger would result in a monopoly and impact competition in China’s paddy insecticide and selective herbicide sector, as well as the global acid copolymers and ionomers market. Despite this result, the government can still approve this merger provided the two MNCs fulfill major obligations as listed below:
Agrochemicals Subject to Divestiture
Selective herbicide on Paddy-All existing registrations and pending registrations of methsulfuron and azimsulfuron technical and formulations, the tangible and intangible assets, personnel, global and regional R&D divisions, as well as other two selective herbicides which are currently under development stage;
Paddy Insecticides-All existing registrations and pending registrations of chlorantraniliprole, Indoxacarb and cyantraniliprole, as well as the tangible and intangible assets, personnel, global and regional R&D divisions;
5-Year Post-Merger Obligations
Within 5 years after the transaction, the merged company should supply and market the agrochemicals listed below under non-discrimination and non-exclusive basis.
Herbicides- Prices of Bensulfuron, carfentrazone-ethyl+bensulfuron, pyrazosulfuron and sulfoxaflor technicals and formulations should be maintained at reasonable level (no higher than the average price over the last 12 months);
Non-Exclusive Distribution -Chinese distributors will be protected from any exclusive binding of proprietary formulations containing bensulfuron+ carfentrazone-ethyl, pyrazosulfuron, bensulfuron, penoxsulam, cyhalofop-butyl, penoxsulam+ cyhalofop-butyl and penoxsulam+ butachlor, sulfoxaflor and sulfoxaflor+ chlorpyrifos;
Meanwhile, Dow should segregate its acid copolymers and ionomers business to ensure approval, including means of production, clients, supply contracts, intellectual property and operation agreements.
