China National Chemical and Switzerland's Syngenta have agreed to divest three types of pesticides in order to win U.S. Federal Trade Commission approval for their $43 billion merger.

According to a complaint filed by the FTC, the merger as originally proposed is likely to cause significant competitive harm in the U.S. markets for three pesticides that must be spun off:

  • The herbicide paraquat, which is used to clear fields prior to the growing season
  • The insecticide abamectin, which protects primarily citrus and tree nut crops by killing mites, psyllid, and leafminers
  • The fungicide chlorothalonil, which is used mainly to protect peanuts and potatoes.

Syngenta owns the branded version of each of the three products at issue, giving it significant market shares in the United States, the FTC said. At the same time, a ChemChina subsidiary specializing in generic pesticides is either the largest or second-largest generic supplier in the United States for each of the listed products.

Without the proposed divestiture, the merger would eliminate the direct competition between ChemChina's generic versions and Syngenta's branded products and lead to higher prices or accept reduced service for each, the FTC said.

To ward off the competitive harm, ChemChina must sell its U.S. paraquat, abamectin and chlorothalonil crop protection businesses to California-based agrochemical company AMVAC.

The Syngenta transaction has also been approved by national security regulators at the Committee on Foreign Investment in the U.S. despite concerns voiced by some U.S. lawmakers about illegal subsidies foreign governments sometimes provide to companies designated as 'state champions' seeking to gain access to markets like the U.S. and about food security and safety.

ChemChina currently has a April 28 deadline for tendering of Syngenta shares. The deadline is expected to be extended until all regulatory approvals and other closing conditions are met.

The Syngenta deal is one of four major agrochemical industry mergers U.S. regulators and their counterparts around the globe have been reviewing. Last week the European Commission approved Dow Chemical's (DOW) - Get Report $130 billion acquisition of DuPont (DD) - Get Report . Also pending are Bayer's (BAYRY) $66 billion bid for Monsanto (MON)  , and the $36 billion merger of fertilizer makers Agrium (AGU) and Potash Corp. of Saskatchewan (POT)  .

The Syngenta deal was well underway before President Donald Trump's appointees were assigned to leadership positions at the antitrust agencies so it's a stretch to say this approval is an indication of whether the other mergers will receive conditional approval too.

The deals, have draw the ire of environmental and farming advocacy groups and the American Antitrust Institute, an organization that pushes for strong antitrust enforcement, has suggested that consolidation in the agrochemical space to date has already left too few eligible buyers big enough to take on the divestitures needed to ameliorate the competitive harm likely to be caused by the current round of consolidation.

The EC's approval for the DuPont and Dow deal was conditioned upon DuPont divesting its Cereal Broadleaf Herbicides and Chewing Insecticides portfolios, its Crop Protection research and development pipeline and organization, excluding seed treatment, nematicides, and late-stage R&D programs.

Dow has also offered to sell its global Ethylene Acrylic Acid copolymers and ionomers business to SK Global Chemical Co. Ltd.