The European Commission has approved under the EU Merger Regulation the acquisition of Monsanto by Bayer. The merger is conditional on the divestiture of an extensive remedy package, which addresses the parties’ overlaps in seeds, pesticides, and digital agriculture.
“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,” said Commissioner Margrethe Vestager, in charge of competition policy. “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. And 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.”
As part of its in-depth investigation, the Commission has assessed more than 2,000 different product markets and reviewed 2.7 million internal documents. It concluded that the transaction as notified would have significantly reduced competition on price and innovation in Europe and globally on a number of different markets. The Commission also had concerns that it would have strengthened Monsanto’s dominant position on certain markets, where Bayer is an important challenger of Monsanto.
The commitments submitted by Bayer address these competition concerns in full:
- They remove all of the parties’ existing overlaps in seed and pesticide markets, where concerns were raised, by divesting the relevant Bayer businesses and assets.
- They cover Bayer’s global R&D organization for seeds and traits as well as Bayer’s research activities to develop a challenger product to Monsanto’s glyphosate. They also cover certain Monsanto assets, which in future would have competed with a Bayer seed treatment against nematode worms.
- Finally, Bayer has committed to grant a license to its entire global digital agriculture product portfolio and pipeline products to ensure continued competition on this emerging market.
On this basis, the Commission concluded that the divestment package enables a suitable buyer to sustainably replace Bayer’s competitive effect in these markets and continue to innovate, for the benefit of European farmers and consumers.
Bayer has proposed BASF as purchaser for the remedy package. The Commission’s assessment is ongoing whether a) the divestiture to BASF meets all purchaser requirements, and b) whether it creates any problematic overlaps or raises other competition concerns.
Bayer and Monsanto can only implement the transaction when the Commission has completed its review of the proposed buyer.