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New megacorporation: merger of Bayer and Monsanto
The European Commission announced in March 2018 that it has reviewed and approved the takeover of Monsanto by Bayer in accordance with the EU Merger Regulation.
Approval is subject to the condition that, under an extensive package of corrective measures, disposals will be carried out to counter the overlap of business activities in the areas of seed, pesticides and digital agriculture.
Bayer has proposed BASF as the purchaser of the disposals package. The Commission has not yet completed its review of whether BASF meets all the requirements for a suitable buyer, and whether this may lead to other problematic overlapping or concerns about competition. Bayer and Monsanto may not complete the merger until the Commission has finished its review of the proposed buyer.
World’s largest supplier of seed and pesticides
Monsanto is the world’s larger supplier of seed. The company earns much of its sales revenue in the USA and Latin America. Among other products, Monsanto distributes glyphosate, the world’s most frequently used weedkiller.
Bayer is the second largest supplier of pesticides in the world. The company is more strongly focused on the European market and is also an important supplier worldwide of seed for a range of cereals. The takeover will create the world’s largest integrated supplier of seed and pesticides.
NGOs criticise mega-merger
Following the Dow-DuPont and ChemChina-Syngenta mergers, the merger of Bayer and Monsanto is the third in the field of seed and pesticides in just a short time.
The initiative “Konzernmacht beschränken”, a civil society alliance of 28 organisations in the fields of development, environment, agriculture, pharmaceuticals, finance and digital policy criticises the EU Commissions decision to approval the Bayer-Monsanto merger subject to conditions.
The initiative warns against growing dependence of farmers on the megacorporation, particularly in the global South. The fear is that choices will be further restricted and, through digital Bayer-Monsanto platforms, seed will in future be sold only in combination with matching pesticides without any alternatives.
Three megacorporations in the global seed and pesticide market
After the merger, the three megacorporations Bayer-Monsanto, Dow-DuPont and ChemChina-Syngenta will control 60 per cent of the global commercial seed market and 70 per cent of the pesticide market.
The initiative criticises the antitrust evaluation of the Bayer-Monsanto merger for giving too little consideration to the two earlier mergers (Dow-DuPont and ChemChina-Syngenta). It also argues that a more critical view is required of the vertical integration of the merger, i.e. the importance of upstream and downstream stages of production. At the same time, the initiative notes that it is the explicit goal of Bayer-Monsanto to offer “integrated solutions” in future – combined packages of seed and pesticides.