Bayer Faces In-Depth EU Review of $66 Billion Monsanto DealBy and
EU sets Jan. 8 deadline for last in trio of mega-mergers
EU flags concerns over higher prices and reduced innovation
Bayer AG faces months of haggling with European Union antitrust regulators who opened an in-depth probe into its $66 billion combination with Monsanto Co. amid concerns the takeover may reduce competition for pesticides, seeds and plant traits.
The European Commission flagged worries that the deal to create the world’s largest pesticides and seeds company risked raising prices for farmers, lowering quality and reducing choice and innovation. It set a Jan. 8 deadline for its merger investigation.
“Seeds and pesticide products are essential for farmers and ultimately consumers,” Margrethe Vestager, the EU’s competition commissioner, said in an emailed statement on Tuesday. "We need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices."
The Monsanto tie-up is the last of a trio of mega-deals reshaping the global agrochemicals industry. The first two drew intense scrutiny, with regulators saying they wanted to ensure that fewer suppliers of crop-protection products and other critical inputs for farmers wouldn’t ultimately lead to higher prices for consumers.
‘Expected’ by Bayer
Bayer said it had expected an extended review "due to the size and scope of the transaction." The company said the deal "will be highly beneficial for farmers and consumers" and it will work constructively with the EU.
Monsanto said it was committed to working with regulators globally "with a view to receiving approval of the proposed transaction by the end of 2017." It said it looked forward to supporting growers’ efforts to be more productive, profitable and sustainable.
Monsanto and Bayer are "two of a limited number of competitors" making pesticides that are capable of discovering new active ingredients and developing new formulations to tackle issues such as weed resistance to older products, the EU said. Regulators also flagged possible problems over high market shares for vegetable seeds. Bayer is one of the few rivals Monsanto faces for plant traits, such as herbicide tolerance, it said.
The combined firm will have the largest portfolio of pesticides products and the strongest global market positions in seeds and traits. The EU said it will check if rivals’ access to distributors and farmers could worsen if the company were to link sales of pesticides or seeds to digital services that provide tailored advice or aggregated data to farmers.
Regulators’ concerns over innovation for agricultural chemicals saw DuPont Co. offer to sell part of its pesticides business and related research and development operations before it won EU approval to merge with Dow Chemical Co. earlier this year. China National Chemical Corp. also had to make concessions before the EU would clear its $43 billion takeover of Swiss pesticide maker Syngenta AG.
Environmental campaigners have bombarded Vestager with hundreds of tweets in recent weeks, asking her to block the deal, on top of more than 50,000 emails and more than 5,000 postcards and letters the EU said it’s received. Avaaz, a campaign group, called on Vestager "to show she has the guts to choose the public interest over corporate greed."
Vestager posted a response to petitioners on the EU’s website, saying she was "carefully investigating the merger" and that her review would be limited to competition issues. Other concerns raised by petitioners fall under EU and national rules to protect food safety, consumers, the environment and the climate.
Commitments submitted by Bayer and Monsanto in July to address the EU regulator’s concerns were considered insufficient to send to rivals for feedback, the commission said.
The EU is cooperating closely with the U.S. Department of Justice and antitrust authorities in Australia, Brazil, Canada and South Africa, it said.