SUBSCRIBE

Breaking News on Food Safety & Quality Control

News > Industry news

Read more breaking news

 

 

Dow/DuPont to divest plastics business amid price hike fears

Post a comment

By Jenny Eagle+

29-Jun-2017
Last updated on 29-Jun-2017 at 11:52 GMT2017-06-29T11:52:31Z

DuPont Bynel coextrudable adhesive resin. Picture: DuPont.
DuPont Bynel coextrudable adhesive resin. Picture: DuPont.

The Canadian Competition Bureau has reached an agreement relating to the proposed merger between DuPont and The Dow Chemical Company regarding its plastic packaging.

As per certain conditions set out by the European Commission , the Bureau agreed the transaction would result in a substantial lessening or prevention of competition and a decrease in innovation in the supply and development of certain crop protection products and specialized packaging plastics.  

SK Global

 

John Pecman

To address these concerns, DuPont has agreed to sell a significant part of its global herbicides business and R&D branch to FMC Corporation, a US based chemical technologies company.

The sale includes DuPont’s Canadian activities in cereal crops herbicides and PrecisionPac, a herbicide dispensing system among Canadian farmers.

“This transaction between two multi-national giants was of interest to Canadian farmers and those involved in this major economic sector,” said John Pecman, Commissioner of Competition, the Canadian Competition Bureau.

The agreement reached today ensures consumers and businesses continue to benefit from a dynamic marketplace, which offers innovative solutions, increased choice and competitive prices.”

As part of the agreement, Dow will sell its global business of certain specialized plastics products (ethylene acrylic acid copolymers and ionomers), typically used in packaging applications for food, beverages and pharmaceuticals, to SK Global Chemical Co. (SK Global), a new entrant in these markets.

Following an investigation, the Bureau found FMC Corporation and SK Global are acceptable buyers, as they are likely to compete effectively and support innovation in the sector in Canada.

US Department of Justice

As well as the Canadian Competition Bureau The US Department of Justice called for Dow and DuPont to divest multiple crop protection and two petrochemical products to proceed with their merger. 

The Justice Department’s Antitrust Division, along with the offices of three state attorneys general, filed a civil antitrust lawsuit on June 15, in the US District Court for the District of Columbia to enjoin the proposed transaction, along with a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns. 

The participating state attorneys general offices represent Iowa, Mississippi, and Montana.

The department said, without the divestitures, the proposed merger would reduce competition between two of only a handful of chemical companies that manufacture certain types of crop protection chemicals and the only two US producers of acid copolymers and ionomers, potentially harming US farmers and consumers. 

“The Department of Justice conducted a thorough investigation into this merger,” said Andrew Finch, acting assistant attorney general, US Justice Department Antitrust Division. 

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

The remedies obtained by today’s settlement, including the divestiture of DuPont’s market-leading Finesse and Rynaxypyr crop protection products, will preserve vigorous competition in the sale of these products and benefit American farmers and consumers alike.”

Broadleaf herbicides

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. 

DuPont’s Finesse product is the market leading broadleaf herbicide for winter wheat, and Dow recently introduced a broadleaf herbicide called Quelex to compete with Finesse. 

DuPont’s Rynaxypyr line of products, sold in the US under the brand names Altacor, Coragen, and Prevathon, are the top selling insecticides for chewing pests, and compete with Dow’s methoxyfenozide products, sold in the US under the Intrepid brand, and Dow’s spinetoram products, sold under the Delegate and Radiant brands. 

The complaint alleged loss of competition between Dow and DuPont would result in higher prices, less favorable contractual terms, and a reduced incentive to innovate for each of these products.

It also claimed Dow and DuPont are the only two US suppliers of acid copolymers and ionomers, both of which are high-pressure ethylene derivative products for food packaging and other plastics applications. 

According to the complaint, customers for each of these products would have no choice but to accept higher prices from the merged company following the transaction.  

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 US. 

The proposed settlement further requires Dow to divest its US acid copolymers and ionomers business to a buyer approved by the US to remedy the merger’s harm in the US markets for acid copolymers and ionomers.

Post a comment

Comment title *
Your comment *
Your name *
Your email *

We will not publish your email on the site

I agree to Terms and Conditions

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Key Industry Events

 

Access all events listing

Our events, Shows & Conferences...