On Tuesday 22 August, the European Commission opened an in-depth investigation into the proposed acquisition of Monsanto by Bayer, due to concerns that the transaction will create competition distortions in the pesticides, seeds and traits sectors.
The proposed acquisition of the American company by its German counterpart would create the world’s largest integrated pesticides and seed company, as both entities are already extremely active in these areas. The operation, under consideration for several months, was notified to the European Commission on 30 June and the companies presented commitments to the institution a month later, on 31 July, aiming to appease its doubts as to the compatibility of the transaction with EU competition rules.
As these segments of activity are already oligopolistic, the Commission has concerns that a merger of the two companies would lead to an increase in prices, a drop in quality and slower innovation on several markets. Also noting that seeds and pesticides are vital to farmers and consumers, the Commissioner for Competition, Margrethe Vestager, said: “we need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices”.
As regards the key points of this in-depth investigation, the Commission will particularly focus on non-selective pesticides, as Bayer and Monsanto are two of very few players able to innovate and develop new products in this area. As they are also both particularly active in the seeds sector, the institution will consider whether the proposed transaction will significantly affect competition in the sector. As Bayer is one of Monsanto’s very few rivals in the traits markets, for instance giving plants greater resistance to insects and diseases, the Commission will also look at any competitive effects resulting from the acquisition. Finally, the institution will attempt to determine whether the merger will block newcomers from entering the pesticides and seeds markets, particularly in the framework of digital agriculture.
The Commission now has until 8 January 2018 to reach its decision. (Original version in French by Lucas Tripoteau)