• ChemChina-Syngenta Merger

ChemChina-Syngenta Merger (Photo : Getty Images)

In a move to settle the Federal Trade Commission (FTC) charges that the proposed ChemChina-Syngenta merger would affect competition in U.S. markets, the two companies have agreed to divest three types of pesticides, according to Street Insider.

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In its complaint, FTC identified the three pesticides as the following:

- the herbicide paraquat - used to clear fields prior to the growing season;

- the insecticide abamectin - used to exterminate mites, psyllid, and leafminers to protect citrus and tree nut crops; and

- the fungicide chlorothalonil - used mainly to protect peanuts and potatoes.

Syngenta AG has substantial shares in the U.S. markets as it owns the branded version of the three identified products. Meanwhile, ADAMA, ChemChina's subsidiary, is into generic pesticides and is the first or second largest supplier of the three products in the U.S.

According to FTC, the merger between China National Chemical Corporation (ChemChina) and Syngenta AG, a Swiss global agricultural company would eliminate the competition between ADAMA and Syngenta's products, therefore a proper divestiture must be made by the two companies.

FTC added that U.S. customers may now likely pay higher prices to buy the three pesticides as a result of the merger or will be forced to accept reduce service.

In the proposed settlement, ChemChina must sell all ADAMA's rights and assets on the three pesticide businesses to AMVAC, an agrochemical company based in California.

The consent agreement would also include an asset maintenance order and also gives the FTC power to appoint a monitoring agency.

The report said that the transaction was reviewed by global enforcement agencies. The FTC also cooperated with antitrust agencies in Australia, Canada, the European Union, India, and Mexico, to evaluate the proposed transaction and potential remedies, to reach a solution beneficial to U.S. consumers.

FTC then voted 2-0 to issue the complained and released the proposed consent order to the public for comment, according to the report.

The public comment on the agreement will be expected on May 4, about 30 days after it was present. After that, the Commission will make consent order final.

The public comments can be submitted electronically or in paper form, in the "Supplementary Information" section of the Federal Register notice, the report added.