WASHINGTON- Senator Chuck Grassley of Iowa on Tuesday sent a letter to the Department of Justice Antitrust Division asking for a careful analysis of the Dow DuPont merger. Grassley is Chairman of the Senate Judiciary Committee which has jurisdiction over antitrust issues.
The letter comes as several biotech and seed companies have announced potential mergers. The Dow Chemical and DuPont transaction is potentially a $130 billion deal.
In the letter, Grassley expressed concerns that the proposed merger could negatively impact competition within the agricultural biotechnology and seed industry and have an adverse effect on farmers and consumers.
“I am concerned that this transaction will decrease competition in an agriculture sector that has already been subject to a number of waves of consolidation in recent years,” Grassley wrote. “The proposed transaction could raise barriers to entry in the market for smaller companies and potentially harm innovation, and could adversely impact choice and price of products for farmers and consumers.”
The seed industry has experienced a consolidation trend which started in the mid-1990s that has left six major companies, including Monsanto, DuPont, Syngenta, Bayer, Dow, and BASF.
Should these potential mergers succeed, only four major companies will remain.
“I continue to hear farmers express concerns about how a more consolidated agricultural biotech and seed industry will impact them,” Grassley said. “Federal regulators need to thoroughly consider the implications on agriculture, farmers and consumers of such a seismic shift to this industry before they sign off on any transactions.”
Grassley regularly asks the Justice Department to carefully scrutinize proposed mergers to ensure that healthy competition is maintained and that consumers are not harmed.
The full text to the letter is included below. The signed letter can be found here.
June 14, 2016
VIA ELECTRONIC TRANSMISSION
Ms. Renata Hesse
Principal Deputy Assistant Attorney General, Antitrust Division
United States Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530
Dear Ms. Hesse:
I write to express concerns with the proposed merger of Dow Chemical Co. and DuPont Co. and how it will impact competition in the agricultural biotechnology and seed industry. The proposed transaction, with a value estimated at $130 billion, currently would result in the largest biotechnology and seed firm in the United States. I am concerned that this transaction will decrease competition in an agriculture sector that has already been subject to a number of waves of consolidation in recent years. I am concerned that the proposed transaction could raise barriers to entry in the market for smaller companies and potentially harm innovation. I also am concerned that the proposed transaction could adversely impact choice and price of products for farmers and consumers.
Dow Chemical has an estimated value of over $70 billion, whereas DuPont has an estimated value of $58 billion. According to a press statement released by the two companies, the parties intend to merge and then split into three independent, publicly traded companies focusing on agriculture, material science and specialty products.
I have heard concerns that the proposed merger will alter agricultural input markets for seeds and chemicals. I have heard concerns that the merger will vertically integrate traits, seed and chemicals, which will make it more difficult for smaller biotechnology companies, independent producers and independent crop input companies to compete. I also have heard concerns that the merger will reduce cultivation, chemical and seed choices for farmers, as well as raise prices for them – which ultimately will impact consumers and the food system. Further, I have heard concerns that the proposed merger could curtail critical research and development initiatives which are a significant driver for innovation in the industry.
I urge the Antitrust Division to conduct a careful analysis of this proposed transaction to ensure that a competitive market in the agricultural biotechnology and seed industry is not impacted in an adverse way, considering the current backdrop of proposed mergers (ChemChina and Syngenta AG) and merger discussions (Monsanto Co. and Bayer AG).
Thank you for your attention to this matter. I look forward to hearing from you soon.
Charles E. Grassley
United States Senator