November 21, 2017

 

New CFA Report Warns of Unprecedented Impact on Free Markets from Proposed Bayer-Monsanto Merger

 

Bayer-Monsanto merger draws opposition from US consumers' group.

 

The Consumer Federation of America, an association of more than 250 non-profit consumer and cooperative groups, is vehemently opposing the proposed merger between the agrochemical giants 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".

 

Moreover, according to Dr. Mark Cooper, a senior fellow at CFA, the merger "violates the Horizontal Merger Guideline by more than any merger ever proposed in the 50 years since the Department of Justice issued the Guidelines".

 

"The Department of Justice must block this deal, or it will be overwhelmed by a tsunami of grossly anticompetitive, anti-consumer merger proposals", he said.

 

"The bundling of traits, seeds and chemicals, backed up with onerous contractual conditions, locks consumers in and competitors out", Cooper added.

 

In August the European Commission opened an in-depth investigation to assess the proposed acquisition of Monsanto of the US by Bayer of Germany under the EU Merger Regulation, concerned that the merger might reduce competition in areas such as pesticides, seeds and traits.

 

'Globally concentrated'

 

The proposed would create the world's largest integrated pesticides and seeds company, according to the EC, adding it would combine two competitors with leading portfolios in non-selective herbicides, seeds and traits, and digital agriculture. 

 

The EC had also said the transaction would take place in industries that were already globally concentrated, as illustrated by the mergers of Dow and Dupont and Syngenta and ChemChina, in which the EC intervened to protect competition.

 

The EC is expected to arrive at a decision on or before Jan. 8, 2018.

 

The EC clarified that the conduct of an in-depth investigation does not prejudge the final result of the investigation.

 

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

 

Shareowners of Monsanto approved the merger with Bayer on Dec. 13 last year. Under the terms of the merger agreement, Monsanto shareowners will receive $128 per share in cash at the closing of the merger.

 

"The acquisition of Monsanto is driven by our strong belief that this combination can help address the growing challenges facing farmers and the overall agriculture industry today and in the future", explained Werner Baumann, CEO of Bayer AG. —Rick Alberto