The Competition Commission has recommended to the Competition Tribunal that the proposed large merger between DuPont and Dow Chemical Company be approved with conditions.
Both Dow and DuPont are companies incorporated in accordance with the company laws of the US.
Dow is the ultimate parent company of the Dow Group, which is broadly active in the research, development, production and distribution of plastics and chemicals, agricultural sciences including seeds, hydrocarbon and energy products and services.
In South Africa, Dow’s activities include the distribution of sunflower seeds, agrochemicals, material science products and food texturisers.
In South Africa, DuPont is involved in the distribution of various seeds including maize and sunflower seeds. DuPont is also involved in the distribution of agrochemicals.
Although there is no direct overlap arising in respect of the commercialisation of hybrid and genetically modified hybrid maize seed in South Africa, since Dow does not have maize seed commercial operations in the country, the commission found that the proposed transaction would likely result in the removal of potential competition.
This is because Dow had plans and a strategy to enter the South African commercial maize seed market.
The instant transaction removes the potential constraining influence that would have been exerted on DuPont and Monsanto had Dow proceeded with its plans to enter the South African market absent the merger.
The commission also found that the proposed transaction was likely to lead to a substantial prevention or lessening of competition post-merger in the market for development and supply of insecticides for chewing insects for citrus, deciduous fruits, vegetables and tomatoes.
To address concerns relating to maize seed, Dow will make available 81 maize hybrids and seven maize inbred lines to other third parties for licensing of these hybrids and inbreds in South Africa.
Secondly, Dow is required to register its PowerCore and Enlist biotechnology traits in South Africa within two years of approval of the merger.
In relation to insecticides, the merging parties are required to divest DuPont’s entire insecticide business, including the research and development associated with developing such products.
The divestiture will include the insecticides supplied into South Africa, which implies that the production and supply of these insecticide products will be taken over by a different third party.
Since Dow and DuPont are large global crop protection manufacturers, the divestiture ensures that the buyer will be a separate entity, and more importantly for South Africa, the condition requires that the purchaser of this divested business is specifically required to continue to supply the insecticides in South Africa.
Farmers will continue to benefit from the availability of these insecticides in South Africa at competitive prices from a different supplier who is neither Dow nor DuPont.