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The American Antitrust Institute, Food & Water Watch and National Farmers Union urged the U.S. Department of Justice Antitrust Division to challenge the proposed merger of Dow Chemical Co. and DuPont Co.
The letter claims the proposed merger would further consolidate an already highly concentrated biotechnology industry and would likely curtail innovation, raise prices, and reduce cultivation choices.
The companies plan to merge and then spin off the agriculture business into a publicly traded company that would be based in Delaware.
The groups urged the Justice Department to critically review the implications of the pending deal. The letter cited three major areas of concern, including eliminating head-to-head competition in the corn and soybean markets, reducing vital innovation competition, and creating a large, integrated “platform” of traits, seeds, and chemicals that would make it harder for smaller biotechnology rivals to compete.
The current rumored or announced deals—including Dow-DuPont, ChemChina-Syngenta, and Bayer-Monsanto—would be a third wave of consolidation. Two previous merger waves eliminated the majority of small to medium-sized biotechnology R&D firms to create the Big Six—Monsanto, Syngenta, Bayer, DuPont, Dow and BASF, the coalition claimed.
The letter cited documents that end duplicative research and development programs will contribute to the $1.3 billion in cost synergies produced by a merger of Dow’s and DuPont’s agriculture assets. As part of cost-cutting efforts leading up to the merger, DuPont has already eliminated R&D jobs in agriculture in Delaware.
Competitive R&D investments have been “crucial for driving innovation in an industry where the probability of commercial success is relatively low due to the time and cost associated with bringing a trait from research to market,” the letter stated.
The proposed merger would create a powerful duopoly between Dow-DuPont and Monsanto, the letter stated. Together, the two companies would control 76 of the market for corn and 66 percent of the market for soybeans, giving them the power to charge farmers higher prices and effectively decide which seeds farmers could plant.
“Seed costs are the highest input expense for farmers. While some of the cost can be attributed to more sophisticated technology, we have seen time and again that consolidation and market restructuring has increased the cost of crop inputs. In a lagging farm economy with multi-year trends of low commodity prices, additional cost increases for crop inputs could cripple a lot of family farms in this country,” said National Farmers Union President Roger Johnson.
The letter can be read here.
