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DOJ Cracks Down on Dow-DuPont Merger, Mandating Divestitures
In a move to preserve competition in the chemical industry, the Justice Department has announced that it will require The Dow Chemical Company (Dow) and E.I. DuPont de Nemours & Co. (DuPont) to divest multiple crop protection and two petrochemical products to proceed with their proposed merger valued at about $130 billion.
The proposed merger, which would bring together two of the largest chemical companies in the world, was initially met with concerns from regulators and industry experts. The Justice Department’s Antitrust Division, along with the offices of three state attorneys general, filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to enjoin the proposed transaction, along with a proposed settlement that would resolve the department’s competitive concerns.
The participating state attorneys general offices represent Iowa, Mississippi, and Montana. The department said that, without the divestitures, the proposed merger likely would reduce competition between two of only a handful of chemical companies that manufacture certain types of crop protection chemicals and the only two U.S. producers of acid copolymers and ionomers, potentially harming U.S. farmers and consumers.
“The Department of Justice conducted a thorough investigation into this merger,” said Acting Assistant Attorney General Andrew Finch. “As originally proposed, the merger would have eliminated important competition between Dow and DuPont in the development and sale of insecticides and herbicides that are vital to American farmers who plant winter wheat and various specialty crops. In addition, it would have given the merged company a monopoly over ethylene derivatives known as acid copolymers and ionomers that are used to manufacture many products, including food packaging.”
According to the department’s complaint, Dow and DuPont are two of only a few significant competitors in the markets for broadleaf herbicides for winter wheat and insecticides for chewing pests. Specifically, DuPont’s Finesse product is the market leading broadleaf herbicide for winter wheat, and Dow recently introduced a new broadleaf herbicide called Quelex to compete with Finesse.
Under the terms of the proposed settlement, DuPont must divest its market-leading Finesse herbicide and Rynaxypyr insecticide products to a buyer to be approved by the United States. The department said that the divestiture of these products, which have total combined annual U.S. sales of over $100 million, would preserve competition in U.S. markets for broadleaf herbicides for winter wheat and insecticides for chewing pests. The proposed settlement further requires Dow to divest its U.S. acid copolymers and ionomers business to a buyer approved by the United States to remedy the merger’s harm in the U.S. markets for acid copolymers and ionomers.
The proposed settlement would resolve the competitive concerns of the Justice Department and the participating state attorneys general offices, allowing the merger to proceed with the required divestitures. The outcome of the proposed settlement would benefit American farmers and consumers alike by preserving competition in the chemical industry.
The Dow Chemical Company is a defendant in this case, with the exact criminal charges being Antitrust Violations. The case was filed in the District of Columbia on 2017-01-13. As part of the proposed settlement, Dow must divest multiple crop protection and two petrochemical products to proceed with the merger. The proposed merger valued at about $130 billion was initially met with concerns from regulators and industry experts.
Key Facts
- State: District of Columbia
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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