EU launches in-depth probe into Bayer-Monsanto deal

23 Αυγούστου, 2017
EU launches in-depth probe into Bayer-Monsanto deal

Brussels has launched an in-depth probe into German chemical giant Bayer’s $66bn purchase of Monsanto, the latest in a trio of megamergers reshaping the global agri-business industry and one that would create the world’s largest supplier of seeds and crop chemicals. European antitrust authorities worry the deal would “reduce competition in a number of different markets resulting in higher prices, lower quality, less choice and less innovation”.

The view echoes concerns raised by some farmers, regulators and politicians over a combination one environmental campaigner has dubbed a “marriage made in hell”. Margrethe Vestager, European competition commissioner, is concerned the deal could reduce competition and research and development in pesticides, seeds and so-called traits, which are the patented characteristics of genetically modified seeds. Brussels is also worried it could lead to lower investment in new digital technologies for farms, such as using data to tailor farming methods.

“We need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices,” said Ms Vestager. “And at the same time maintain an environment where companies can innovate and invest in improved products.” The fixes Bayer and Monsanto offered at the end of July in an attempt to address the regulator’s concerns proved insufficient. Details of that proposal remain confidential but Brussels is expected to seek disposals in product development, as well as areas where the businesses overlap, such as cotton seed, rapeseed and pesticides. Bayer said it had expected an in-depth review “due to the size and scope of the transaction” and maintained the combination would be “highly beneficial for farmers and consumers”.

Monsanto added: “Through this combination, we look forward to supporting growers in their efforts to be more productive, more profitable and more sustainable”.

However, farmers and politicians have raised concerns about the effect of allowing a small number of big companies to dominate the agricultural industry. “It’s vital to keep a competitive market with a good range of plant-protection products and other agricultural inputs available, with a long-term commitment to research and product development, in order to meet the needs of European farmers and their co-operatives,” said Pekka Pesonen at the European farmers organisation Copa and Cogeca.

The EU investigation will focus only on the deal’s effect on competition, Ms Vestager explained in a letter in response to more than 50,000 emails, 5,000 letters and numerous tweets raising concerns about the deal. An online petition asking antitrust regulators to block the deal has gathered more than 1m signatures. Germany’s Bayer is a global, life sciences conglomerate that makes drugs for humans and animals, raw materials for plastics, crop chemicals and seeds. US-based Monsanto is best known for its Roundup herbicide and genetically-modified seeds and traits with sales focused in North and South America. Last month, 17 Democratic senators wrote to US antitrust authorities saying they were worried the deal would reduce competition, limit seed options and increase prices for farmers and consumers. The letter claimed that Bayer-Monsanto controlled nearly a quarter of the world’s pesticides sales and that Bayer-Monsanto and Dow-Dupont (another recently combined agri-business giant) would control 76 per cent of the market for corn and 66 per cent of the market for soyabeans.

The Bayer-Monsanto deal would accelerate the rapid consolidation of the global agri-business market, following on from the merger of Dow Chemical and Dupont and the ChemChina acquisition of Swiss-seed-maker Syngenta. Brussels conducted in-depth investigations on both those deals and approved them earlier this year once it had secured concessions including the disposal of substantial part of the businesses.

Dow and Dupont agreed to sell nearly all of DuPont’s crop-spray research and development capability to counter EU officials’ qualms that together the companies would develop fewer new crop-protection chemicals. ChemChina sold a large part of its European generic crop chemical business to gain EU clearance for its purchase of Syngenta. European authorities have until January 8 to reach a decision on whether to clear the Bayer acquisition of Monsanto, however both companies insisted they were hopeful of closing the deal before the end of 2017. Brussels is not the only regulator that has to approve the deal — 30 antitrust bodies around the world are considering its implications. But Ms Vestager demanded the most far-reaching concessions in the other two agri-mergers.

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