On the 15th of June, 2017, the consolidation between DuPont (DD.N) and Dow Chemical Co (DOW.N) has already defeated U.S. antitrust approval to combine together. After merging, the company would be mainly divided into three departments, which are material science, speciality products, and seeds and agrochemicals.
There are several advantages after DuPont and Dow Chemical Co combine together. From the Justice Department, they said that “the asset sales would prevent price hikes or lost innovation.” In other words, there is no significant competition for the price, and two companies could work together to innovate brand new products, which either one company has to put much efforts including money and time to innovate individually. According to the statement from Assistant Attorney General Andrew Finch, it indicates that “as originally proposed, the merger would have eliminated important competition between Dow and DuPont in the development and sale of insecticides and herbicides that are vital to American farmers who plant winter wheat and various speciality crops.” Thus, the big advantage is to preserve vigorous competition between the two companies so that the price of the products would dramatically raise in the future.
Nevertheless, there are also several disadvantages. Roger Johnson, the president of the National Farmers Union, said that “deeply disappointing” based on the decision of the combination for DuPont and Dow Chemical Co. Why did he say that? Although there is no vigorous competition, it actually drives up costs for farmers’ inputs. Moreover, Johnson also said that “it reduces the incentive for the remaining agricultural input giants to compete.” Thus, the combination between the two companies is seemed a good trend; however, it could form monopoly. The statement from Assistant Attorney General Andrew Finch also indicates that “the merged company would have also gained a monopoly over ethylene derivatives used to manufacture food packaging and other products.”
Finally, based on the requirement from U.S. antitrust enforcers to set up the combination, two companies had gave up in a deal they struck with European regulators in the month of March. Therefore, they are waiting approvals from some countries including Canada and Mexico.
