US Senate Hears Concerns About Ag Mergers

23.09.2016 -

At a hearing held by the US Senate’s Judiciary Committee on Sept. 20, executives of five companies involved in the current round of mergers in the global agrochemicals industry – US players Dow, DuPont and Monsanto, along with German and Swiss players Bayer and Syngenta – faced questions from senators and industry stakeholders about the transactions currently being reviewed or soon to be by US antitrust regulators. The only merger party not in attendance was ChemChina.

The hearing was convened by the committee’s chairman, Iowa Senator Chuck Grassley, himself a farmer, who said he feared the consolidation in the industry could lead to rising input costs in a declining agriculture economy. It provided solely a sounding board for the concerned parties, however, as the committee has no jurisdiction over mergers.

According to US media reports, most of the panel expressed reservations about all of the proposed deals, including Bayer’s $66 billion buyout offer accepted last week by Monsanto, ChemChina’s proposed $43 billion takeover of Syngenta and the all-stock merger between Dow and DuPont planned to include an agriculture company with around $19 billion in annual sales.

Senators from the Democratic Party questioned whether some mergers are just too big for antitrust regulators to fix as well as the extent to which ChemChina could influence Syngenta’s policies. When pressed by one legislator as to whether Syngenta would claim state immunity if sued in a US court, CEO Erik Frywald suggested it would not.

Asked if its new Chinese owner would give Syngenta preference in its own market, the Swiss manager pointed out that all of the five companies present – as well as Germany’s BASF, which is not a party to any of the mergers –were already engaged in cross-licensing, so that this was not likely to be an issue.

Roger Johnson, president of the US National Farmers Union (NFU), gave a scathing indictment of the mega-merger plans. In the farmers’ view, he said, the mergers would result in less competition, less innovation and higher prices, thus jeopardizing family farmers’ and ranchers’ ability to make a living.

“The hands-off approach we have seen in antitrust enforcement has led to the highly consolidated economic conditions prevalent today and the resulting vulnerability of American farmers. We must do to more to prevent consolidation that results in a few companies controlling a substantial percentage of market share,” Johnson said, adding: “The nation’s antitrust enforcement has clearly failed farmers, ranches, rural communities and consumers.”