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

Featured Stings

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

To all far-right partisans who exploit Charlie Hebdo atrocity: a peaceful reply given by a peaceful student

EU Youth Goals – we are shapers not listeners

Christine Lagarde: This is what we can still learn from the Great War

Hungary has made progress on greening its economy and now needs to raise its ambitions

Here’s how we get businesses to harmonize on climate change

Turkey: MEPs cut support by €70m due to no improvement in respect for EU values

Greece lost a month that cannot be found neither in “mini Summits” nor in Berlin

Will the end of QE come along with ECB’s inflation target?

Telecommunications and Internet: A Jungle with no principles?

European Youth Vlog

WEF Davos 2016 LIVE: Cameron corroborates that Britain should remain in the EU

Worldwide UN family celebrates enduring universal values of human rights

Why EU’s working and unemployed millions remain uncertain or even desperate about their future

War of words in Davos over Eurozone’s inflation/deflation

A Year in China

Skeptic France about Trump-Juncker trade deal favoring German cars; EU’s unity in peril

Commission hardens its stance against carmakers ensuring emissions reductions targets

Back to the future: flying cars are becoming a reality

The Commission calls for a climate neutral Europe by 2050*

Can the EU afford to block China’s business openings to Europe by denying her the ‘market economy status’?

EU crisis aggravates structural differences, threatens cohesion

Has the treacherous theory about the ‘French patient’ finally prevailed?

Trust and support of Iraqis essential for success of UN’s Da’esh terror investigation

Politics still matter in the US but not in Europe

Nagasaki is ‘a global inspiration’ for peace, UN chief says marking 73rd anniversary of atomic bombing

G20 GDP growth nudges up to 1.0% in the second quarter of 2018

Human rights chief calls for international probe on Venezuela, following ‘shocking accounts of extrajudicial killings’

ECB’s Draghi favours a cheaper euro to serve all Eurozone countries

Blockchain could boost global trade by $1 trillion

IMF’s Lagarde: Ukraine must fight corruption

How we can work together in the fight against NCDs

COP21 Breaking News_05 December: Carbon Price Needed for Climate Change Success

Latest leaked TTIP document confirms EU sovereignty may be under threat

Access to ‘affordable’ medicines in India: challenges & solutions

Horse meat runs faster than authorities…

Liaison Officer – 2020

ECB tied in the anti-monetary German ideology

Healthcare for refugees: a necessary symbiosis of medicine and politics

The EU will always have a stable partner in Montenegro, says President Đukanović

A Europe that Protects: Commission calls for decisive action on security priorities

EU to spend €6 billion on youth employment and training futile schemes

EU readies for eventual annulment of the Turkish agreement on immigrants-refugees

Is the ECB ready to flood Eurozone with freshly printed money?

Taliban-led violence during recent Afghan polls leaves record high numbers of civilians dead – UN

Draghi left alone with no hope of boosting EU growth as Merkel just focuses on next elections

Draghi to lay his print on long term ECB policies prior to exiting next year

Sanctions on Russia to be the biggest unity test at this European Council

From drones to health data, how Japan can power ahead

Eurozone examines the prospect of issuing debt paper jointly

4 things President Trump could learn from Jimmy Carter

How will Brexit affect higher education in the EU?

The EU threatens to occupy Libya militarily; is another colonial war brewing?

Challenges remain in DPRK despite ‘slight’ improvements in health, wellbeing: UNICEF

Trump systematically upsets global order and trade: Where does this end?

The key takeaways of G7 Summit in Canada

No improvement in respect for EU values: MEPs cut support for Turkey by €70m

Sustainability is now mission critical for businesses. Here’s why

Raw materials use to double by 2060 with severe environmental consequences

Is Europe misjudging its abilities to endure more austerity and unemployment?

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