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

the sting Milestone

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

May a parody constitute a copyright infringement? European Court of Justice to give the answer

Around 52 million in Near East, North Africa, suffering chronic undernourishment, new UN food agency report reveals

International community makes important progress on the tax challenges of digitalisation

Nature is our strongest ally in ensuring global water security

Crimea, a wicked game of political chess and a ‘big’ coincidence

Junker for Commission President: What were the stakes in this affair

Why the ECB suddenly decided to flood banks with money?

One million facing food shortages, nutrition crisis after Mozambique cyclones: UNICEF

Poliomielitis: climatic changes and impossibility in border control

Syria war: executions condemned as violence continues ‘on both sides’ of border with Turkey

Banks, insurance giants are free again to abuse the real economy

Conflicts and extreme climate change threatens access to food in 39 countries – UN agriculture report

Hydrogen isn’t the fuel of the future. It’s already here

MEPs propose ways to boost plastics recycling

‘Break the cycle’ of disaster-response-recovery, urges top UN official, as death toll mounts from Cyclone Idai

Time to measure up: 5 ways the fashion industry can be made more sustainable

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

Income inequality threatens the socio-political structures in developed countries

Peacekeeping chief highlights challenges facing UN Police

Guterres in Davos: ‘Dysfunctional’ response to common problems, shows need for effective multilateralism

Vestager vs. Google: a fight to ensure a competitive innovation framework

Children are forgetting the names for plants and animals

Online government services could change your life. But only if you have access to the internet

Deep fakes could threaten democracy. What are they and what can be done?

The EU now has rules that say household appliances must be easier to fix

“Is Europe innovative? Oh, Yes we are very innovative!”, Director General of the European Commission Mr Robert-Jan Smits on another Sting Exclusive

MEPs back plans to promote water reuse for agricultural irrigation

European car industry: The Germans want it all

European Council: Choosing new leaders for the EU betrays efforts for a wider arrangement

Our global system has spun out of control. Here’s how to rebalance it

Drone regulation is necessary to democratize the sky for humanity

Here’s how we reboot digital trade for the 21st century

4 reasons cities should embrace Universal Basic Income

GSMA Mobile 360 Series – MENA in Dubai, in Association with The European Sting

Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising

The result of European Elections 2019 seals the end of the business as usual era in Brussels

Road injuries leading cause of death for the young, despite safety gains: UN report

Industrial price dive may lead to point of no return

Why home is the least safe place to be a woman

Afghanistan: Civilian casualties caused by IEDs has reached ‘extreme levels’, UN warns

MEPs back plans to halt spread of drug resistance from animals to humans

Japan’s population is shrinking by a quarter of a million people every year

Ingredients for a new life: how cooking helps refugees and migrants blend in

Climate change and health: a much needed multidisciplinary approach

Prospect of lasting peace ‘fading by the day’ in Gaza and West Bank, senior UN envoy warns

Rohingya refugee shelters ‘washed away’ in Bangladesh monsoon rains: UN agency

Eurozone hasn’t escaped the deflation danger

Cheese energy could power hundreds of UK homes

Does hosting a World Cup make economic sense?

Vendor Pulse – 2000

A health approach to climate change

Opening – Parliament expresses support for victims of Fuego volcano in Guatemala

Nicaragua ‘crisis’ still cause for concern amid murder, torture allegations: Bachelet

Ecocraft: take gaming to another level by greening Minecraft

5 facts about the world’s most valuable company, Saudi Aramco

Mergers: Commission clears Vodafone’s acquisition of Liberty Global’s cable business in Czechia, Germany, Hungary and Romania, subject to conditions

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

A quarter of Pacific islanders live below ‘basic needs poverty lines’, top UN development forum hears

UN experts decry torture of Rakhine men and boys held incommunicado by Myanmar’s military

Predicting two more years of economic stagnation

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