The EU clears Bayer-Monsanto merger amid wide competition and environmental concerns

Bayer’s cross at night (Copyright: Bayer AG)

Bayer’s cross at night (Copyright: Bayer AG)

Last week, the European Union formally gave its approval to Germany multinational company Bayer’s $62.5 billion acquisition of US-based Monsanto. Bayer AG, leader in the chemical and pharmaceutical industry, got one step closer to take over the world’s largest seed company, after agreeing to bolster BASF SE by selling to it seeds, pesticides and digital agriculture technology, winning Brussels’ ok-go.

Bayer has said it is now working closely with authorities in the US – where the merger still needs to be cleared – to close the transaction in the second quarter of 2018, and so to create a company with control of more than a quarter of the world’s seed and pesticides market.

Background

The mammoth Bayer-Monsanto merger, which won the EU’s approval last week, has got a year-long history. It was almost 10 months ago when the world found about Bayer’s intent to acquire Monsanto and to create the world’s biggest farm chemical group and agricultural supplier. On May 19 last year, Monsanto for the first time confirmed Bayer’s interest in a statement, saying  that “an unsolicited, non-binding proposal” for a potential acquisition was received, as reported by The Wall Street Journal back then. The statement said Monsanto’s board was reviewing the proposal, but also added that there was no assurance a deal would ever take place.

Subsequently, the German giant’s executives confirmed they had met with the leaders of Monsanto to discuss a possible acquisition, saying a tie-up would “create a leading integrated agriculture business”, and after one week the size of the move became known: Bayer forwarded an offer for $122 per share in cash, or a total value of $62 billion.

In-depth investigation

A few months later, after many rumours about potential antitrust concerns such a huge deal would have likely raised, the EU broke its silence, and the Commission formally declared it had opened an in-depth investigation to assess the proposed acquisition of Monsanto by Bayer under the EU Merger Regulation. On August 21, 2017, an official EU statement said the Commission had concerns that “the merger may reduce competition in areas such as pesticides, seeds and traits”.

As part of its in-depth investigation, the Commission has declared it has assessed more than 2,000 different product markets and reviewed 2.7 million internal documents.

Test passed

Last week, after 7 months, Bayer’s executive board could finally breathe a sigh of relief: the European Commission confirmed it has approved under the EU Merger Regulation the acquisition of Monsanto by Bayer. Commissioner Margrethe Vestager, in charge of competition policy, stressed: “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”.

“In particular, we have made sure that the number of global players actively competing in these markets stays the same. That is important because we need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices”, she added. “We need competition to push companies to innovate in digital agriculture and to continue to develop new products that meet the high regulatory standards in Europe, to the benefit of all Europeans and the environment”, she also said.

Competition concerns

In an official EU statement, Brussels also declared the merger is conditional “on the divestiture of an extensive remedy package, which addresses the parties’ overlaps in seeds, pesticides and digital agriculture”. Indeed, the deal secured EU approval only after the companies offered to sell some of its herbicide and seeds businesses to rival BASF SE, to alleviate the EU’s watchdog’s concerns that the tie up with the giant American agribusiness Monsanto would hurt competition in the EU.

According to the Financial Times, BASF agreed to buy Bayer’s non-selective herbicide business and some of its seeds business in October for €5.9 billion, and has recently agreed a further purchase of its rival’s vegetable seed business for around €1.5 billion. The Commission is due to rule on the BASF deal by April 16.

Third giga-merger

The Bayer/Monsanto transaction is the third in a row in the seeds and pesticides sector in the EU. The Commission has said that, in line with its case practice, the assessment of the merger between Bayer and Monsanto has been based on the market situation following the Dow/Dupont merger and the ChemChina/Syngenta merger, taking the remedies in both cases into account. According to Bloomberg, the three just-mentioned companies will together control 61 percent of the world’s seed and pesticide markets.

Green concerns

Since a potential merger between the two giants was announced last year, campaigners and non-governmental organizations have been voicing concerns about the impact that such an “endless” new company, with control of more than a quarter of the world’s seed and pesticides market, could have on the markets. US-based online campaign group Avaaz was among the first one to criticize the EU approval. “This is a marriage made in hell. The Commission ignored a million people who called on them to block this deal, and caved in to lobbying to create a mega-corporation which will dominate our food supply”, Avaaz legal director Nick Flynn said, as reported by Reuters. The Greens grouping in the European Parliament echoed the sentiment, underscoring that smaller players in the agriculture industry needed to be helped too.

Adrian Bebb of Friends of the Earth Europe spoke of data concerns. “The Commission decision also allows them [Bayer and Monsanto], together with BASF, to become data giants in agriculture – the ‘Facebooks of farming’ – with all the pitfalls that entails”, he argued. “This merger will create the world’s biggest and most powerful agribusiness corporation, which will try to force its genetically modified seeds and toxic pesticides into our food and countryside”, he added.

“New magnitude”

Slow Food president Carlo Petrini also expressed his criticism. In a letter sent last week to the European Commissioner Margrethe Vestager, Mr. Petrini – who has also been interviewed exclusively by the European Sting last year – said: “We are deeply concerned by the conditions of dependence that are created by this merger. We cannot afford to have the future of food in hands of so few. Food is a human right, and indeed, a right for all living things.”

“The impact of the merger will go beyond the financial markets”, Mr. Petrini added in his letter, seen by the European Sting. “This is a dangerous loss of sovereignty. “It means that the worldwide production of food will be evermore influenced by the decisions made behind closed doors in the offices of companies whose only goal is the maximization of profit and stock prices. This concept isn’t new, but the magnitude is”, he said.

US playground

Now Bayer and Monsanto still have to convince regulators in the States, where the merger hasn’t been cleared yet. In an official press release, Bayer said last week they and Monsanto are “working closely with the authorities – including the Department of Justice in the United States – with the goal of closing the transaction in the second quarter of 2018. Bayer’s CEO Werner Baumann called the approval by the European Commission’s “a major success and a significant milestone” though.

There are currently three on-going merger investigations by the European Commission: the proposed merger between Praxair and Linde, the proposed acquisition of Cristal by Tronox, and the proposed acquisition of Ilva by ArcelorMittal.

On the one hand, headquartered in Germany, Bayer is a diversified pharmaceuticals, consumer health, agriculture (Bayer Crop Science) and animal health company. This transaction mainly concerns the Bayer Crop Science division. On the other hand, headquartered in the US, Monsanto is an agriculture company which produces seeds for broad acre crops, fruits and vegetables as well as plant biotechnology traits. It also supplies pesticide products.

Monsanto has been targeted many times by environmentalists and campaigners for being one of the main creators of products containing glyphosate, an herbicide that has been suspected for a long time by the World Health Organization to be carcinogenic before more recent findings.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Road use charges: reforms aim to improve fairness and environmental protection

David Attenborough’s worried about this ocean threat – and it’s not plastic

Deadly swine fever threatens Asia, UN agriculture agency warns, urging regional collaboration

A free press is ‘cornerstone’ for accountability and ‘speaking truth to power’: Guterres

EU deal on electricity market rules to benefit both consumers and environment

7 ways for businesses to capture the youth dividend

Security Council imposes arms embargo on South Sudan

The Future of Balkans: Embracing Education

Eurozone in trouble after Nicosia’s ‘no’

A Valentine’s Special: heart has nothing to do with it, it’s all Brain

Are we at risk of a financial crisis? Our new report takes a look

The digital skills gap is widening fast. Here’s how to bridge it

How India is solving its cooling challenge

‘Dangerous nationalism’ seriously threatens efforts to tackle statelessness: UNHCR chief

State aid: Commission finds Luxembourg gave illegal tax benefits to Engie; has to recover around €120 million

The sustainable fashion revolution is well underway. These 5 trends prove it

Iraq: Security Council told ‘despair’ has ‘given way to hope’ but road to stability ‘long and far from easy’

Global leaders and companies pledge to reduce the gender pay gap by 2030

Boosting adult learning essential to help people adapt to future of work

More accessible products and services for disabled and elderly people

Why the answer to a more sustainable future could lie within the platform economy

MEPs vote for upgrade to rail passenger rights

eGovernmnet for more efficiency, equality and democracy

Solutions for cultural understanding: medical students’ perspective

LGBTQI+ and medicine

These 4 scenarios show how we might be working in the future

JADE Testimonial #3: Sebastian @ Fundraising

Ensure that widows are ‘not left out or left behind’, UN chief urges on International Day

The influence of the multilateral agreement on migrant health

Our tourism system is broken – time to customize

Indonesia has a plan to deal with its plastic waste problem

‘Crimes against humanity,’ ‘war crimes’ and risk of new ethnic violence in DR Congo, warn UN experts

Vaccines: from miracle to possible danger

Turkey presents a new strategy for EU accession but foreign policy could be the lucky card

Humane leadership must be the Fourth Industrial Revolution’s real innovation

Is the European Banking Union an impossible task?

UN Security Council ‘utterly failed’ Syrian detainees; a victim voices her plea to ‘end impunity and stop this horror’

European Young Innovators Forum @ European Business Summit 2014: Europe for StartUps, vision 2020

Technology can help solve the climate crisis – but it will need our help

EU continues targeting on Chinese steel imports instead of the revival of its own economy

Cyprus tragedy reveals Eurozone’s arbitrary functioning

Countries must invest at least 1% more of GDP on primary healthcare to eliminate glaring coverage gaps

UNICEF delivers medical supplies to Gaza in wake of deadly protests

Kids who live in the countryside have better motor skills, a study in Finland has found

UN atomic watchdog chief updates governing body on key North Korean reactor

Prevent future crises and empower youth – now!

Energy Union: EU invests a further €800 million in priority energy infrastructure

UN-backed intercultural dialogue forum urged to keep working to ‘bridge gap between the like-minded’

Immigration crisis at its very worst: EU to outsource rescue business to North Africa?

EU announces record €550 million contribution to save 16 million lives from AIDS, tuberculosis and malaria

Could robot leaders do better than our current politicians?

The European Sting @ Mobile World Congress 2014, Creating What’s Next for the World. Can EU Policy follow?

UN chief welcomes possibility of resumed talks between US and North Korea

Corruption In The Balkans Is Impeding EU Membership

EU-India summit: Will the EU manage to sign a free trade agreement with India before Britain?

Banking Union: Non-performing loans in the EU continue to decline

Protests, violence in Haiti prompts international call for ‘realistic and lasting solutions’ to crisis

Unemployment and stagnation can tear Eurozone apart if austere policies persist

Greece begins a new chapter following the conclusion of its stability support programme

Across the world, women outlive men. This is why

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s