DowDuPont Inc - proposed acquisition of EI du Pont de Nemours and Company and The Dow Chemical Company

Summary

The Dow Chemical Company (Dow) and E.I. Du Pont de Nemours and Company (DuPont) propose to merge their two companies and spin the merged entity off into three separate companies focusing on Agriculture, Material Science and Speciality Products.

Market definition

The ACCC considered the effects of the proposed acquisition on the following markets:

national markets for the supply of various crop protection products (including insecticides, herbicides and fungicides)

a national market for the breeding, development and supply of canola seed varieties

The scope of the individual crop protection product markets was determined according to how the products were used by farmers, and was considered on a case by case basis. The ACCC considered that, in general, products with the same active ingredients were likely to be close substitutes. However, in many cases, there were alternative products based on other active ingredients that could be used for the same purposes.

This analysis was informed by many factors, including:

the pest or disease targeted, or the range of different pests or diseases against which a product can provide protection

the crop

the stage in the growing season at which protection is required

the growing conditions in which the crop protection is applied

the application method, and

consideration of environmental impact (including impact on beneficial insects), health and safety, and residues remaining on the crop after treatment.

The scope of the market for breeding, development and supply of canola seed varieties was determined according to the factors farmers consider when selecting seeds. The ACCC considered that, in general, seeds for a particular crop are likely to be close substitutes, although seasonal and geographic factors will impact substitutability. In some cases, alternative crops may be substitutable for each other.

Competition analysis

The ACCC took into consideration DuPont's commitments to the European Commission relating to:

Divestiture of DuPont's insecticides

Divestiture of DuPont's herbicides

Divestiture of DuPont's research and development business

Divestitures of Dow's ionomer and acid copolymer businesses.

These commitments remove the overlap between DuPont and Dow in relation to the supply of insecticides and herbicides, including in Australia. The ACCC concluded that the proposed acquisition would not substantially lessen competition in any relevant market after taking into consideration these divestments.

In relation to canola seeds, an area of possible concern discussed in the Statement of Issues, the ACCC found that there are other breeders, developers and suppliers of canola seed with larger market share than the parties and will continue to stimulate competition tension in canola research and development post-merger. The ACCC also considered that Dow's offering targeted a specific segment of the canola seed market that was not targeted by DuPont.