August 29, 2017

EC opens probe into proposed acquisition of Monsanto by Bayer

The European Commission has opened an in-depth investigation to assess the proposed acquisition of Monsanto by Bayer under the EU Merger Regulation.

The EC expressed concerns that the merger might reduce competition in areas such as pesticides, seeds and traits.

"Seeds and pesticide products are essential for farmers and ultimately consumers. We need to ensure effective competition so that farmers can have access to innovative products, better quality and purchase products at competitive prices, and at the same time maintain an environment where companies can innovate and invest in improved products", Commissioner Margrethe Vestager, who oversees competition policy, said.

The proposed acquisition of US- based Monsanto by Bayer of Germany would create the world's largest integrated pesticides and seeds company. It would combine two competitors with leading portfolios in non-selective herbicides, seeds and traits, and digital agriculture. Both companies are active in developing new products in these areas.

Moreover, according to the EC, the transaction would take place in industries that are already globally concentrated, as shown by the recent mergers of Dow and Dupont and Syngenta and ChemChina, in which the EC intervened to protect competition for the benefit of farmers and consumers.

The EC has until Jan. 2018, to arrive at a decision. 

On July 31, Bayer and Monsanto submitted commitments to address some of the Commission's preliminary concerns. However, the Commission considered these commitments insufficient to clearly dismiss its serious doubts as to the transaction's compatibility with the EU Merger Regulation.