Syngenta, ChemChina submit remedy proposals to EU

Syngenta’s Interaction Centre at Stein, Switzerland. (Syngenta.com)

Hong Kong/Beijing | Reuters — China National Chemical Corp (ChemChina) and Swiss pesticides and seeds group Syngenta have proposed remedies to the European Union’s competition watchdog to address concerns over their US$43 billion merger agreement.

The European Commission’s website showed “commitments” submitted on Monday, which typically means the parties have proposed remedies such as asset divestment or specific product pricing. It did not elaborate on the nature of the pair’s commitments.

“Details of the remedy proposals are confidential,” a spokesman for state-owned ChemChina told Reuters.

Syngenta could not be immediately reached for comment.

The Commission began investigating ChemChina’s takeover of Syngenta in October, saying they had not allayed concerns about potentially unfair competitive advantages. The deal has already been approved by regulators in several markets including the U.S. and Australia.

The Commission’s concerns are widely seen as the last major regulatory hurdle.

Syngenta said last week the Commission had agreed to extend its review of the deal by 10 working days to April 12 to allow “sufficient time for the discussion of remedy proposals.”

In its October statement, the Commission highlighted ChemChina subsidiary Adama Agricultural Solutions as one area where ChemChina and Syngenta had an overlapping portfolio of European crop protection products, including herbicide and insecticide. A merger could therefore potentially reduce competition for such products.

Israel-based Adama makes generic crop protection and pest control products. It is the largest supplier of generic crop protection products in Europe, according to the Commission.

Ioannis Kokkoris, chair in law and economics at Queen Mary University of London, said divesting Adama was the simplest and cleanest means for ChemChina to address competition concerns.

“That ChemChina has not done this yet suggests it is trying to mitigate a full divestment of Adama, such as by selling a number of significant activities,” said Kokkoris. “The other scenario is that it has agreed to divest Adama and is now discussing top-up remedies.”

These could include commitments to continue funding research in certain products to ensure the deal does not adversely affect innovation in product development, he said.

The Commission’s next step would be to test the proposed remedies against its market model, Kokkoris said.

“The companies have identified a list of products that may have caused the Commission’s concerns in respective countries,” a senior Beijing-based industry executive with knowledge of the talks told Reuters last week.

“Although the progress has taken slightly longer than expected, communication with the Commission has been smooth,” said the executive, who was not authorized to speak publicly on the matter and so declined to be identified.

Syngenta said last week the companies were fully committed to the deal and were confident of its closure.

Reporting for Reuters by Chen Aizhu in Beijing and Michelle Price in Hong Kong.

explore

Stories from our other publications