March 22, 2018
EC conditionally OKs Bayer-Monsanto merger
The European Commission has conditionally approved the acquisition of US seeds supplier Monsanto by German pesticide firm Bayer, saying the merger hinged on the divestment of an extensive remedy package, which addresses the parties' overlaps in seeds, pesticides and digital agriculture.
The EC said it had arrived at the decision after an in-depth review of Bayer's proposed acquisition of Monsanto.
The EC said the commitments submitted by Bayer to address competition concerns remove all the parties' existing overlaps in seed and pesticide markets, where concerns were raised, by divesting the relevant Bayer businesses and assets; and cover Bayer's global R&D organisation for seeds and traits as well as Bayer's research activities develop a challenger product to Monsanto's glyphosate. The commitments also cover certain Monsanto assets, which in the future would have competed with a Bayer seed treatment against nematode worms.
Bayer has also committed to grant a licence to its entire global digital agriculture product portfolio and pipeline products to ensure continued competition on this emerging market.
'Meeting competition concerns'
The EC said the divestment package enables a suitable buyer to sustainably replace Bayer's competitive effect in these markets and continue to innovate, for the benefit of European farmers and consumers.
"We have approved Bayer's plans to take over Monsanto because the parties' remedies, worth well over €6 billion, meet our competition concerns in full. Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger", said Commissioner Margrethe Vestager, who is in charge of competition policy.
Vestager also said that they have made sure that the number of global players actively competing in these markets stays the same, saying this is important "because we need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices" and "to push companies to innovate in digital agriculture and to continue to develop new products that meet the high regulatory standards in Europe".
Bayer has proposed BASF as buyer for the remedy package, and the EC is currently assessing whether the divestment to BASF meets all purchaser requirements and whether it creates any problematic overlaps or raises other competition concerns.
Bayer and Monsanto can only implement the transaction when the Commission has completed its review of the proposed buyer.
Late last year, the Consumer Federation of America, an association of more than 250 nonprofit consumer and cooperative groups, expressed opposition to the merger between Bayer and Monsanto, saying the merger would "dramatically increase the incentive and ability to raise prices and manipulate research and development to the detriment of farmers and consumers".
Shareowners of Monsanto approved the merger with Bayer on Dec. 13, 2016. Under the terms of the merger agreement, Monsanto shareowners will receive $128 per share in cash at the closing of the merger.-Rick Alberto