U.S. Lawmakers Plan Hearing Over Wave of Agriculture Mergers
August 23 2016 - 11:14AM
Dow Jones News
By Jacob Bunge
U.S. lawmakers say they plan to hold a hearing that will examine
a wave of mergers that could reshape the $100 billion global market
for seeds and pesticides.
Sen. Charles Grassley (R., Iowa), chairman of the Senate
Judiciary Committee, said multibillion-dollar deals between some of
the agriculture sector's biggest players could reduce competition
and lead to higher prices for farmers at a time when farm income is
projected to hit its lowest level in more than a decade.
"In most instances when you have less competition, prices go up,
and consumers pay more," Mr. Grassley said in an interview. "In the
case of agriculture, farmers are both consumers of [seeds and
chemicals], as well as marketers of products."
The plan comes a day after China National Chemical Corp. said
its planned $43 billion takeover of Syngenta AG was cleared by the
Committee on Foreign Investment in the U.S., or CFIUS, which
evaluates deals involving foreign companies purchasing U.S.
businesses. Syngenta, among the world's largest pesticide and seed
manufacturers, generates about 25% of its sales in North
America.
DuPont Co. and Dow Chemical Co., both of which maintain large
seed and crop chemical divisions, are proceeding with their own
merger plan that would combine their businesses and then split into
three separate companies, including an enlarged agriculture
firm.
German pharmaceutical giant Bayer AG, which also makes seeds and
pesticides, since May has been pursuing a takeover of Monsanto Co.,
the world's largest supplier of crop seeds and genetics. Though
Monsanto several times has rejected Bayer's proposals, the
companies continue to discuss a deal.
Mr. Grassley said the September hearing will aim to ensure that
antitrust enforcers at the U.S. Department of Justice and the
Federal Trade Commission are properly vetting the proposed deals.
The hearing will seek to include seed companies' "points of view,"
though he said it was too early to say who would appear, and the
committee also will examine the proposed deals' potential effect on
consumers.
Mr. Grassley, who has previously called for scrutiny of
agricultural mergers, was among a group of lawmakers who earlier
this year sought a deeper review of the ChemChina-Syngenta merger,
raising concerns around food security.
Other lawmakers have raised similar concerns. Sen. Debbie
Stabenow (D., Mich.) on Monday reiterated a call for the U.S.
Department of Agriculture and the Food and Drug Administration to
have a permanent role in reviewing foreign-driven acquisitions of
U.S. assets.
"Food security and safety are critical to national security and
must be taken into consideration during the CFIUS review process,"
she said.
--William Mauldin contributed to this article.
(END) Dow Jones Newswires
August 23, 2016 10:59 ET (14:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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