Germany: Agribusiness European Commission to Investigate Acquisition of Monsanto by Bayer

Editor: Alexander Stark

The European Commission has opened an in-depth investigation to assess the proposed acquisition of Monsanto by Bayer under the EU Merger Regulation. The institution has concerns that the merger may reduce competition in areas such as pesticides, seeds and traits.

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EU Commission opens in-depth investigation into proposed acquisition of Monsanto by Bayer
EU Commission opens in-depth investigation into proposed acquisition of Monsanto by Bayer
(Source: Bayer)

Brussels/Belgium — On the institution's website, the Commission mentioned preliminary concerns that the proposed acquisition could reduce competition in a number of different markets resulting in higher prices, lower quality, less choice and less innovation.

Commissioner Margrethe Vestager, in charge of competition policy, 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 also purchase products at competitive prices. And at the same time maintain an environment where companies can innovate and invest in improved products.”

The proposed acquisition of Monsanto (US) by Bayer (Germany) would create the world's largest integrated pesticides and seeds company. It would combine two competitors with leading portfolios in non-selective herbicides, seeds and traits, and digital agriculture. Both companies are active in developing new products in these areas.

Moreover, the transaction would take place in industries that are already globally concentrated, as illustrated by the recent mergers of Dow and Dupont and Syngenta and Chemchina, in which the Commission intervened to protect competition for the benefit of farmers and consumers.

The transaction was notified to the Commission on 30 June 2017. The Commission now has 90 working days, until 8 January 2018, to take a decision. The opening of an in-depth investigation does not prejudge the final result of the investigation.

On 31 July 2017, Bayer and Monsanto submitted commitments to address some of the Commission's preliminary concerns. However, the Commission considered these commitments insufficient to clearly dismiss its serious doubts as to the transaction's compatibility with the EU Merger Regulation. The Commission therefore did not test them with market participants.

The Commission has been petitioned through emails, postcards, letters and tweets expressing concerns about the proposed acquisition of Monsanto by Bayer. The Commission's mandate under the European merger control rules is to assess the merger solely from a competition perspective. This assessment must be impartial and is subject to the scrutiny of the European Courts.

The other concerns raised by the petitioners are subject to European and national rules to protect food safety, consumers, the environment and the climate.