The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Belchim by Mitsui. The approval is conditional on full compliance with a commitments package offered by Mitsui.
Belchim and Mitsui both distribute third-party crop protection products and supply their own formulated products for high-value crops such as potatoes, vegetables and vines. For such crops, both companies sell a wide range of products that are mostly based on off-patent active ingredients (AI). In the European Economic Area (EEA), Mitsui is mainly active in crop protection through its subsidiary Certis, based in the Netherlands.
The Commission's investigation
The Commission's investigation found that the proposed transaction, as originally notified, would have reduced competition in the following crop protection markets:
Plant growth regulators (PGR) used to prevent or control sprouting in stored potatoes: In 2020 the AI chlorpropham was banned by the EU and since then, both Mitsui and Belchim have been among very few suppliers that sell, or are about to sell, alternative products to chlorpropham in post-harvest potato PGRs markets in Denmark, Germany, Poland, Sweden, and potentially in Finland and Norway. The transaction would have led to high combined market shares in countries where Mitsui and Belchim compete. Also, it would have eliminated competition from Mitsui as a potential entrant in Finland and Norway. The Commission was therefore concerned that this would give rise to higher prices for potato PGRs in those countries.
Paraffinic oils used to prevent or limit the spread of viruses in seed potatoes and flower bulbs: The Commission's investigation showed that Mitsui is the main supplier of paraffinic oils for virus control in seed potato and flower bulb crops in the Netherlands. It also found that there were no suppliers other than Belchim who were likely to make a significant entry on those markets in the near future. The Commission was therefore concerned that the transaction would remove competition from Belchim and that the merged company would have maintained very high market shares in the Netherlands. As a result of the merger, Dutch farmers could have seen higher prices in paraffinic oils used to control viruses in seed potatoes and flower bulbs.
The proposed remedies
To address the Commission's competition concerns, Mitsui offered the following commitments:
- To transfer the Mitsui distribution agreement and customer relationships for its potato PGRs in one or two packages (one for Germany and Poland and the other for the Nordic countries) to one or two remedy takers. If Mitsui cannot transfer both packages within a certain timeframe, it has offered to transfer instead the Belchim distribution agreement and customer relationships for its PGR product under the same terms.
- To transfer to a remedy taker the Belchim distribution agreement and other relevant data and agreements for its paraffinic oils for virus control in seed potatoes and flower bulbs in the Netherlands.
- Both the potato PGRs and the paraffinic oil divestment businesses include access to brands and IP, application machinery and education and training. Mitsui cannot implement the acquisition of Belchim before the Commission has formally assessed and approved the transfer of each of the packages to remedy takers.
These commitments fully remove the overlaps between Mitsui and Belchim in the markets where the Commission had identified competition concerns.
The Commission therefore concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns in the EEA. The decision is conditional upon full compliance with the commitments.
Mitsui, based in Japan, is a trading house engaged in a number of worldwide commodity trade and other businesses, including the distribution and supply of products in various industries such as iron and steel, non-ferrous metals, machinery, electronics, chemicals, energy-related commodities, logistics, and investment in infrastructure projects.
Belchim, based in Belgium, is active in the development and commercialisation of agricultural products, mainly in the European crop protection market. Belchim predominantly distributes a wide range of third-party products but also formulates and sells its own crop protection solutions, in particular for potatoes, vines, fruit and vegetables.
Merger control rules and procedures
The transaction was notified to the Commission on 15 December 2020.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, such as in this case.
More information will be available on the competition website, in the Commission's public case register under the case number M.9686.