(CN) – The European Commission on Wednesday cleared the $43 billion merger of agrichemical giants ChemChina and Syngenta, based on ChemChina’s promise to sell off a large share of its European pesticide business.
Switzerland-based Syngenta is the world’s leading pesticide supplier, marketing products with active ingredients it has developed. ChemChina also sells pesticides in Europe through its Israel-based subsidiary Adama, but only generic products containing active ingredients developed by other companies.
Because Adama is the world’s leading supplier of generic pesticides, the commission had concerns that ChemChina’s proposed takeover of Syngenta would reduce competition in the pest-control market. Furthermore, both companies make and sell plant-growth regulators and combined they would have controlled the majority of that market.
ChemChina agreed to sell of a large swath of Adama’s pesticide business, including: fungicides for cereal and fruit crops; herbicides for cereal, corn and vegetables; insecticides for cereal, fruit, corn and vegetables; and its seed-treatment products for cereal and sugar beets.
Additionally, Syngenta will divest some of its fungicides and herbicides, and Adama will relinquish 29 generic products under development and most of its plant-growth regulator business. The promises satisfied the commission’s competition concerns.
“It is important for European farmers and ultimately consumers that there will be effective competition in pesticide markets after ChemChina’s acquisition of Syngenta,” competition commissioner Margrethe Vestager said in a statement. “ChemChina has offered significant remedies which fully address our competition concerns. This has allowed us to approve the transaction.”
U.S. regulators also gave a preliminary go-ahead to the merger on Wednesday, with the Federal Trade Commission signing off on the deal with its own conditions. It ordered Syngenta to divest an herbicide, an insecticide and a fungicide, and Adama to do the same with its generic versions of the products.
The FTC will make a final decision on the merger after 30 days of public comment.