Jeff Mordock

The News Journal

European Union antitrust regulators have halted their review of the proposed $130 billion merger between The Dow Chemical Co and DuPont, saying it needed more information about the deal and its potential impact on competition in Europe's agriculture markets.

"This procedure in merger investigations is activated if the parties do not provide an important piece of information that the commission has requested," said Ricardo Cardoso, spokesman for the European Commission, said in an e-mail to The News Journal. "To comply with merger deadlines, parties must supply the necessary information for the investigation in a timely fashion. Failure to do so will lead the commission to stop the clock."

Cardoso did not disclose the exact data the commission was seeking.

Dan Turner, a spokesman for DuPont called the delay and information request, "a routine procedural part" of the review process.

"It does not change our timing expectations," Turner said.

A source within DuPont dismissed the matter as merely a document production issue and said the company expects to quickly address it.

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The European Commission will set a new review deadline once it received the missing data. It is unclear if the delay will derail the companies' plans to close the merger in early 2017.

"Once the missing information is supplied by the parties, the clock is restarted and the deadline for the commission's decision is then adjusted accordingly," Cardoso said.

Without knowing exactly what information the commission is looking for, its hard to know the impact of the delay, said Salil Mehra, an antitrust professor at Temple University's Law School.

"The question is going to be whether this piece of information affects divestitures or similar commitments," Mehra said. "The missing piece could affect the shape of the results, even if it looks like the merger will be approved."

Shares of DuPont rose in the morning, peaking at nearly $70 before noon. However, the stock price has dropped slightly in mid-day trading. As of late afternoon Friday, DuPont stock was trading at $68.23 cents.

Matt Arnold, an analyst with Edward Jones in St. Louis described the delay as a "non event."

"The halt is the commission calling a time out," Arnold said. "They have a strict clock they run against and if the information they need is not available, they call a time out. The market is shrugging it off as nothing more than a procedural issue."

In August, the European Commission initiated a second review of the historic merger between the two chemical and agriculture industry giants. The panel was scrutinizing the deal for its impact competition in the seeds, crop protection and other markets. Reviews are required under EU law before a merger can be completed.

Initially, the European Commission was expected to issue a decision in late December, but last week the agency granted both companies' request for a 10-day extension pushing a possible approval date to early January 2017. The companies said in filings with the Securities and Exchange Commission the extension request is "a routine part of the review process."

At the time, DuPont's Turner said it was still possible the transaction could still close before the end of 2016 if the commission doesn't utilize the full extension. With the current delay, however, a 2016 completion would be near impossible.

Earlier this year, the two companies privately detailed to the commission a series of concessions it would make to address antitrust issues. Although the concessions have not been disclosed, they are widely believed to be sales of assets.

The commission, in a statement, said the concessions are "insufficient to clearly dismiss its serious doubts" about whether the merger will stifle innovation and competition throughout the EU. Concerns about other businesses developing competing technologies and price controls were among the issued raised by the commission

Margrethe Vestager, who heads the European Commission, indicated the agency may ask for additional concessions.

"The livelihood of farmers depends on access to seeds and crop protection at competitive prices," Vestager said in a statement. "We need to make sure the proposed merger does not lead to higher prices or less innovation for these products."

Similar reviews are ongoing in the United States, Brazil and Canada.

Mehra said the EU delay will not likely have an impact on the U.S review.

"The agencies do try to align their timing with the other authorities and are in communication, but there is no formal mechanism by which they have to approve of the deal at the same time," he said.

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or jmordock@delawareonline.com.

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