Expect Ag Mergers to Win Approval
By John Dillard, Farm Journal, Columnist
via AgWeb - July 17, 2017
One of the natural consequences of a weaker farm economy is the trickle-down effect on input suppliers. Farmers with tighter margins arenít willing to pay for specialty chemicals or genetics if they arenít guaranteed a return on their investment. Although the effect certainly impacts local and regional suppliers, it has also reached the global corporations that develop and manufacture the bulk of the seed traits and pesticides on the market today. During the latest downturn, companies with an almost exclusive focus on agriculture, such as Monsanto and Syngenta, have been amenable to being acquired by companies with more diverse portfolios, such as Bayer and ChemChina. In addition, Dow and DuPont Pioneer used the merger-friendly environment to combine resources.
Assuming all three of these mergers receive all of their necessary approvals, three very large corporations with expansive product offerings will emerge.
As their customers, farmers have a right to be concerned about the potential for negative consequences stemming from unprecedented concentration among the major seed and pesticide companies with which they do business. There is certainly concern the increased concentration will lessen competition and bring higher prices for customers. On the other hand, farmers might benefit from larger corporations that have more funds to invest in research and innovation. The merged companies might also operate more efficiently and compete by passing on savings to customers.
Congress has armed the Department of Justice (DOJ) and Federal Trade Commission (FTC) with a bevy of tools to protect consumers by ensuring there is robust competition in the marketplace. The primary law being applied in the megamergers is the Clayton Antitrust Act. Under the Clayton Act, major companies that enter into mergers must seek approval from the FTC and DOJ before the merger can close.†
In their evaluations, both agencies...