Dow-DuPont Case in Korea
The Korea Fair Trade Commission (FTC) said that the merger of Dow Chemical and DuPont can restrain the competition in the acid co-polymer sector and ordered to sell the related assets.
The FTC announced on April 9 that it reviewed the merger of “The Dow Chemical Company” and “E. I. du Pont de Nemours and Company” and decided to impose the measures to sell their acid co-polymer assets.
Dow Chemical and DuPont are global chemical firms headquartered in the U.S. The two companies signed a contract for consolidation in December 2015 and reported the merger to the FTC in May 2016. At that time, Dow Chemical and DuPont had more than 1.21 trillion won (US$1.06 billion) and 456 billion won (US$401.41 million) of domestic sales, respectively. Foreign companies with domestic sales of over 20 billion won (US$17.61 million) are required to report to the KFTC when to merge.
The FTC concluded that the merger of the two companies can limit the competition in the acid co-polymer sector. Acid co-polymer is a type of synthetic resins that increases an adhesive strength of various packaging materials, including aluminum foil.
Dow Chemical and DuPont has a market share of 32.5 percent and 15.3 percent, respectively, in the domestic acid co-polymer market. With the merger of the two firms, the market share of top three acid co-polymer producers reach 77.7 percent. Under the current Fair Trade Act, the merger considered a restraint in the competition when a merged company becomes the biggest supplier in the market, a combined market share of the top three market leaders, including the merged firm, exceeds 75 percent and a leading company has 25 percent higher market share than the No.2 company.
The FTC said that the merger of Dow Chemical and DuPont can solidify the current acid co-polymer market situation which is dominated by a handful of producers. Accordingly, it ordered either company to sell its assets related to acid co-polymer development, production and sale in six months after the merger completion and report the sale details in 30 days after the asset sale completion
However, the FTC said that two companies’ businesses in seed, agricultural pesticide and other chemical products don’t overlap and will not restrain the competition in the markets.