Bayer-Monsanto merger gets ACCC approval

Bayer's $80b Monsanto takeover gets ACCC and European approval


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The latest super-sized ag chemical merger will not be opposed by Australia's competition watchdog.

The latest super-sized ag chemical merger will not be opposed by Australia's competition watchdog.

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The ACCC’s thumbs up to the Bayer and Monsanto Corporation merger follows similar approval from European Commission.

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Despite initial Australian concerns, the supersized merger between German conglomerate, Bayer, and US farm chemical and plant genetics giant, Monsanto, will not be opposed by our national competition watchdog.

The Australian Competition and Consumer Commission’s approval of the $80.5 billion ($US63b) deal comes hot on the heels of Bayer and Monsanto Corporation getting a green light from European Union regulators this week.

The EU gave conditional approval to Bayer’s acquisition plan, which will create a company potentially likely to control of more than 25 per cent of the world’s farm chemical and seed market, according to industry analysts.

European consent is, however, subject to Bayer selling off major parts of its herbicide, traits and seeds business, plus a number of research and development functions and projects.

A global divestment program by Bayer has resolved competition concerns in Australia. - Mick Keogh, ACCC

The ACCC conceded it was previously concerned the acquisition may substantially lessen competition in the supply of weed management systems in Australian canola crops and reduce competitive tension in research into new crop protection chemicals.

However, agricultural commissioner, Mick Keogh, said a global divestment program by Bayer had resolved those competition concerns in Australia.

The ACCC had worked closely with the European Commission, the US Department of Justice and the Canadian Competition Bureau in assessing the deal.

It also closely considered certain issues which were unique to Australia, particularly in relation to cotton seed.

“A number of interested parties raised concerns about the cancellation of Bayer’s Australian cotton breeding program and the potential foreclosure of rival Australian providers of cotton seed treatments, given the combined Bayer-Monsanto’s control of the Roundup cotton seed trait,” Mr Keogh said.

Just two weeks before the buyout was revealed, back in September 2016, Bayer CropScience quietly pulled the pin on its genetically modified cotton seed development work in Australia.

The move subsequently sparked questions about the merger’s impact on commercial research and development here when Bayer confirmed its research and development bail-out and the redundancy of several local Bayer CropScience staff.

We need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices - Margrethe Vestager, European Union

Similar development programs in other major cotton-growing countries, Brazil, India and the US were also in doubt as the merger news broke.

Mr Keogh said the ACCC had since investigated these issues in detail and concluded there were no significant competition concerns.

Ag chem merger trifecta

Bayer’s Monsanto takeover is the third of three super mergers initiated in 2016 as big chemical companies responded to tighter margins, soaring product development costs, changing weather trends and faltering global farm economic returns, particularly in the grain sector.

US giants Dow and Dupont merged last year and ChemChina acquired European-based seed and ag chemical business, Syngenta.

Anti-trust regulators in the US are still to approve the deal. 

The EU competition commission said Bayer addressed its concerns with an offer to sell a big portfolio of assets to fellow German chemical behemoth, BASF, although by mid April both were expected to show more proof of BASF’s ability to be a serious competitor to the enlarged Bayer.

BASF is paying more than $9b for broadacre seed and herbicide assets global digital farming data and Bayer also plans to divest its vegetable seeds business to BASF.

“We need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices,” said EU Competition Commissioner, Margrethe Vestager.

Wider restructuring trickles down

Other players, including Australia’s Nufarm, have also picked up other divestments as a trickle down reaction across the global ag chem segment has ensued in the wake of the merger moves.

Various big and mid-sized companies have been scrambling to restructure and re-position themselves with new seed and chemical lines, or offload other assets.

Ms Vestager said the EU decision ensured there would be effective competition and innovation in seeds, pesticides and digital agriculture markets.

"In particular, we have made sure the number of global players actively competing in these markets stays the same."

Bayer’s science and technology business spans products in the healthcare and crop science sectors.

Monsanto, based in St Louis, USA, is best known as the producer of the herbicide Roundup and for its focus on trait technology and digital agriculture.

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The story Bayer-Monsanto merger gets ACCC approval first appeared on Farm Online.

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