The EU Commission has opened a probe into the proposed merger between chemical giants Dow and DuPont, both of which have significant agriculture interests.

The Commission announced that it is looking into whether the proposed merger of the two US-based companies is in line with EU regulations, and whether further consolidation in global agribusiness could reduce competition in areas including crop protection, seeds and petrochemicals. The current wave of consolidation in global agriculture began with Syngenta’s recent acquisition by ChemChina, and looks set to continue with talks between Monsanto and German agchem companies BASF and Bayer fuelling speculation last month.

Commissioner Margrethe Vestager, in charge of EU competition policy, said, “The livelihood of farmers depends on access to seeds and crop protection at competitive prices. We need to make sure that the proposed merger does not lead to higher prices or less innovation for these products.”

The Commission’s announcement follows the publication of an EU-funded report by scientists at London’s Royal Holloway University which listed Corporate control of world agriculture as one of six major threats to wild pollinators around the globe last week. The report outlined sixty threats and opportunities facing insects, birds and some mammals (like bats) that carry out pollination of over a third of agricultural crops and more than 85% of wildflower species, and listed consolidation in major agribusinesses as one of the principal threats at present.

A proposed merger between Dow and DuPont would create the world's largest integrated crop protection and seeds company. It would combine two competitors with large herbicides and insecticides portfolios (as well as petrochemicals used in packaging and adhesives). These industries are already subject to serious concentration, as the Commission noted, the crop protection industry in particular is “Characterised by a limited number of global companies with significant R&D capabilities.”

A preliminary investigation by the Commission highlighted some initial concerns, and the EU executive noted that it “has preliminary concerns that the proposed merger could reduce competition on the [herbicide and insecticide] markets and that the reduction in the intensity of competition may have an impact on price, quality, choice and innovation.”

The new probe will also look into nematicides (control of slugs and other nematodes) and fungicides.  

The proposed merger between Dow and DuPont was announced in June, giving the Commission until December to make a decision. The two companies have already responded to the Commission’s preliminary concerns, but the executive said their “Commitments [were] insufficient to clearly dismiss its serious doubts as to the transaction's compatibility with the EU Merger Regulation.”