EU Commission begins probe into Bayer-Monsanto deal
© DD PUSA/REX/Shutterstock EU Commission officials have begun an in-depth investigation into Bayer’s proposed multi-billion pound acquisition of Monsanto amid concerns about reduced competition and innovation.
The US$66bn (£51.5bn) takeover agreed in September 2016 would create the world’s largest integrated pesticides and seeds company.
But the commission is concerned the move could reduce competition in markets for pesticides, seeds and genetic traits.
See also: Agrochem acquisition must wait for EU competition scrutiny
It is also concerned that the transaction would take place in industries where the number of individual companies has dwindled in recent years, following a spate of mergers such as those between Dow and DuPont, and Syngenta and ChemChina.
Pricing concerns
Launching the investigation on 22 August, the commission said it was particularly concerned farmers could pay higher prices for lower-quality products, less choice and less innovation.
The commission’s competition policy leader, commissioner Margrethe Vestager, said 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,” said Ms Vestager.
The officials have until 8 January 2018 (90 working days) to investigate whether the takeover contravenes EU Merger Regulations and decide whether to approve the deal.
Commission investigation areas
Officials will assess whether any areas could lead to reduced competition, as well as potential impacts on farmers and other consumers in the pesticide, seed or traits markets.
Pesticides
- Monsanto’s glyphosate is the best-selling non-selective herbicide in Europe, while Bayer produces glufosinate-ammonium, one of very few alternatives, giving it a dominant position.
- Monsanto and Bayer are two of a limited number of competitors capable of discovering new active ingredients and developing formulations that could address issues such as pesticide resistance.
- The Commission will assess both Monsanto’s activities in biological pesticide products that would compete with Bayer’s existing portfolio of chemical pesticide products.
Seeds
- Bayer and Monsanto are both active in breeding vegetable seeds. The parties have high combined market shares in vegetable seed markets, and some of their products compete directly with each other.
- Bayer and Monsanto are also active in breeding and licensing seeds for several field crops. Monsanto has the highest market share in oilseed rape seeds in Europe. Bayer, with the highest market share in oilseed rape seeds at a global level, is one of the few players with the means to compete intensively in this market.
Traits
- Monsanto has a dominant position in several traits markets worldwide. Bayer is one of the few competitors and has notably developed alternative herbicide tolerance traits to those of Monsanto. The commission will investigate in particular whether the transaction could lead to a reduction of competition in these markets.