On 7 April, the Korea Fair Trade Commission (KFTC) conditionally approved the proposed merger between Dow Chemical and DuPont. The KFTC was notified of the proposed merger in May 2016. Both parties are global chemical companies headquartered in the United States.
Whilst the KFTC considered several overlap markets (including in the seed and pesticide sector), the KFTC only identified significant competition concerns in the market for the supply of ethylene acrylic acid copolymers and ionomers. On that market, Dupont and Dow are respectively the largest and the third largest competitors with market shares of respectively 32.5 per cent and 15.3 per cent. Their combined market share is twice as high as ExxonMobil, the second largest competitor. Post-transaction, the combined market share of the top three competitors would reach 77 per cent and the number of major competitors would be reduced from four to three, which would significantly increase market concentration. The KFTC therefore considered that the transaction would lead to restrictive effects on this market.
To address this concern, the KFTC imposed a structural remedy requiring the merging parties to divest either DuPont or Dow Chemical’s assets relating to the research and development, manufacture and sale of ethylene acrylic acid copolymers and ionomers within six months from completion of the transaction. The parties are also required to hold separate their respective assets until completion of the divestiture and to submit a compliance report to the KFTC within 30 days after the divestiture.
The same transaction is subject to merger control review also in other jurisdictions including the United States, China, India and Brazil. The European Commission conditionally approved the transaction on 27 March. To secure an EU clearance, the merging parties had to commit to divest amongst others a significant part of DuPont’s existing pesticide businesses together with its global research and development organisation and related assets.