All is not well with the proposed Dow (NYSE: DOW) and DuPont (NYSE: DD) deal. The impending merger is facing intense regulatory scrutiny in different countries, as well as opposition from farmers groups. The main concern is that if the merger is given the go ahead, it will increase the market power of suppliers in the already concentrated market for seed and agro-chemical products. We have analysed how the proposed merger will change the agri-industry dynamics using the Herfindahl-Hirschman Index. Based purely on this quantitative parameter, we find that the corn and soybean market is expected to see increased market power of suppliers of seeds following the proposed merger. Further, the crop-protection market will not be affected much. It is worth mentioning that the U.S. Department of Justice and Federal Trade Commission use HHI (among other different criteria) to measure the level of market concentration as a result of proposed merger.
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