Bayer's Monsanto takeover to be investigated by EU Commission

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Bayer-Monsanto Deal Faces Deeper Scrutiny in Europe
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22 August, 2017

The European Commission has launched an in-depth probe into Bayer's 66 billion USA dollar (£51 billion) takeover of Monsanto, saying the companies failed to address the watchdog's antitrust concerns.

After a months-long pursuit in which it raised its offer prices several times, Bayer won over Monsanto's management for the buyout in September 2016.

Bayer is a German company with pharmaceutical, consumer health and agriculture arms, while Monsanto is the leading global producer of seeds and pesticides, including the controversial glyphosate herbicide.

"We need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices", says Commissioner Margrethe Vestager, in charge of competition policy.

The commission said that it has concerns that the merger may reduce competition in areas such as pesticides, seeds and traits.

Finally, the Commission will also investigate whether competitors' access to distributors and farmers could become more hard if Bayer and Monsanto were to bundle or tie their sales of pesticide products and seeds, notably with the advent of digital agriculture.

In addition, the Commission said the deal might slow the race to develop new products, such as wheat seeds and herbicides against weeds that have grown resistant to existing products.

The EU executive added that 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 commission therefore did not test them with market participants".

Bayer has already pledged to sell its glufosinate crop chemical, branded as Liberty, and canola and cotton seeds that resist the chemical's plant-killing effect to get approval for the deal from South African regulators. The business are roughly estimated to be worth a combined $2.5 billion.

The deal has sparked intense opposition in Europe and further afield.

In order to secure approval to acquire Dupont, Dow had to agree to sell key research and development activities and other major assets.

The commission said its three areas of concern are pesticides, seeds and plant traits.

"Seeds and pesticide products are essential for farmers and ultimately consumers".

"Given the worldwide scope of Bayer and Monsanto's activities, the Commission is cooperating closely with other competition authorities, notably with the Department of Justice in the United States and the antitrust authorities of Australia, Brazil, Canada and South Africa".


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