By Natalia Drozdiak in Brussels and Brian Blackstone in Zurich
BRUSSELS — An industrywide review by European Union antitrust authorities is slowing down approval for some of the megamergers that have promised to reshape the global agrochemicals business.
Swiss seed and pesticide maker Syngenta AG this week said that regulatory approval of its proposed acquisition by China National Chemical Corp. likely will be delayed into early 2017 as regulators seek more information amid a consolidation wave in the sector. The companies had previously expected the deal to close this year.
The comments suggest that the European Commission, the bloc’s antitrust regulator, likely will open an in-depth investigation into the Syngenta-ChemChina deal by Oct. 28, the EU’s deadline to complete the initial merger review.
The EU usually assesses mergers on a case-by-case basis and in the order in which they have been officially registered with the regulator. But the EU’s antitrust chief Margrethe Vestager has previously signaled that her department’s review of the deals would take into consideration the fact that several mergers in the agricultural sector were taking place at one time.
Bayer says it is preparing its submissions to regulators for the plans announced last month to acquire U.S. seed giant Monsanto for $ 57 billion.
The European Commission declined to comment.
Speaking before European lawmakers earlier this month, Ms. Vestager said it was too early to tell of the outcome of the agricultural deals but that it was important for farmers to benefit from affordable prices, quality and innovation.
Companies in the agricultural sector are scrambling to merge as declining prices for crops weigh on profit. But the wave of tie-ups, which also includes plans by Dow Chemical Co. and DuPont Co. to combine and then subsequently split in three, poses a challenge for regulators who normally conduct thorough reviews of such mergers.
In the U.S., the deal boom in the agriculture sector has prompted concerns in farm states, drawing scrutiny even from Republican leaders often skeptical of government intervention.
The ChemChina-Syngenta deal, however, already has cleared a major regulatory hurdle in the U.S., after winning approval from the Committee on Foreign Investment in the U.S. — a government body with the power to block deals it deems a threat to the nation’s security.
EU regulators likely will scrutinize certain effects of the deals more closely than their counterparts in other jurisdictions, says Ioannis Lianos, a professor of global competition law at University College London.
In the EU, regulators likely will be stricter than peers in other regions when weighing whether the mergers create unreasonably high barriers to entry for rivals, particularly if there is a risk the companies create products that only work with their own brands, he said.
On Tuesday, Mr. Fyrwald said Syngenta received data requests from the EU on crop, geography and active ingredients. He said the companies didn’t meet an EU deadline last Friday to submit remedies to address potential antitrust issues because European regulators weren’t ready to provide feedback.
Syngenta’s review comes as the EU already has opened an in-depth investigation into the Dow-duPont merger on concerns the deal could lead to higher crop seed and pesticide prices. The commission said it found the concessions Dow and DuPont outlined in July “insufficient to clearly dismiss its serious doubts” about the merger being in line with EU rules.
On Tuesday, DuPont CEO Ed Breen told analysts on a conference call that the merger with Dow seems likely to close in the first quarter of 2017, instead of by the end of this year, because of the longer EU review. He said discussions with antitrust authorities in other countries, including the U.S., Brazil and China, were constructive and progressing.
On the Bayer-Monsanto deal, while analysts have said Bayer’s crop science division is complementary with Monsanto, the parties may have to sell some overlapping businesses, including in cotton and canola seeds and herbicides, to satisfy antitrust concerns.
–Christopher Alessi in Frankfurt and Jacob Bunge in Chicago contributed to this article.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Brian Blackstone at brian.blackstone@wsj.com
(END) Dow Jones Newswires 10-26-160544ET Copyright (c) 2016 Dow Jones & Company, Inc.
Plantations International