Bayer offers concessions to EU over Monsanto deal

German pharmaceutical and life sciences company Bayer has proposed concessions to persuade the European Commission (EC) to approve its acquisition of US agrochemical giant Monsanto.

Bayer has agreed to sell its seeds and non-selective pesticides business to rival chemical manufacturer BASF for €5.9 billion in an attempt to alleviate concerns that the combined business could infringe EU competition law.

Bayer is adamant that the significant concessions will address the EC’s concerns over possible antitrust issues. The EC has extended its antitrust review deadline to 5 April 2018, and a decision will be made on whether to approve or block the acquisition, which is worth up to $66 billion.

European competition commissioner Margrethe Vestager said in a comprehensive investigation into the deal last August: “We need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices…and at the same time maintain an environment where companies can innovate and invest in improved products.”

According to Vestager, Bayer-Monsanto could increase prices, reduce quality, restrict variety or fail to innovate its pesticides and seeds, and the seed-trait market.

Other concerns include lowered investment in new digital technology for farms, such as using data to tailor farming methods.

Bayer’s agreement to acquire Monsanto in September 2016 was seen as the third mega-merger in the chemical and seed industry. Vestager approved two deals last year – the merger between Dow and DuPont and ChemChina’s acquisition of Syngenta.

Both approvals required extensive reviews by the European Commission which came only after all parties promised to sell large portions of their businesses to maintain healthy competition in the industry. The offer by the aforementioned companies to sell certain crop protection products seemed to satisfy Vestager on both occasions.

The Bayer-Monsanto deal has generated a significant response from farmers and environmentalists, who have sent the Commission over 50,000 petition emails and 5,000 letters arguing against the acquisition.