Bayer-Monsanto Merger Would be Anticompetitive, According to Legal Group

04 Aug 2016 --- Concerns have been raised by anti-trust legal experts over a potential Bayer-Monsanto take over, claiming it would be ‘presumptively anticompetitive’.

In a new report ‘An Antitrust Review of a Bayer-Monsanto Merger’, US-based Konkurrenz Group warns a merger to create the world’s largest seed and pesticide company would violate antitrust laws and reduce competition.

The report is written by co-founders of the Konkurrenz Group former attorneys with the US Department of Justice, Maurice E Stucke and Allen P Grunes.

Direct competition between two of the biggest players in the seed sector would be eliminated, according to the report, which would affect seed development and herbicide markets. The consequences would be higher food prices for consumers and less choice.

“The merger would increase concentration in already concentrated industries for genetic traits, seed and herbicides. For example, Bayer-Monsanto post-merger would account for approximately 70 percent of the US acreage for cotton, with similar or higher shares in difference regions of the US,” the report says.

“Eliminate not only the direct competition between Bayer and Monsanto for traits, herbicide and crop seed, but also the head-to-head competition in agricultural biotechnology innovation markets and reduce opportunities for pro-competitive research and development collaborations.”

“Likely lead to higher input prices, less choice and higher food prices for consumers, including fewer non-biotechnology options available to farmers and consumers.”

It adds that because a Bayer-Monsanto merger would significantly increase concentration in already highly concentrated markets, the merger is “presumed to be anticompetitive and should be enjoined.”

It goes on to say: “Bayer’s potential acquisition of Monsanto could affect competition in many jurisdictions, including the European Union. Although we focus on the federal merger law and the US Department of Justice and Federal Trade Commission’s 2010 Merger Guidelines, the European Commission’s Merger Guidelines follow a similar framework.”

“In both the EU and US, the enforcers seeks to prevent mergers that would likely deprive customers of the benefits of competition by significantly increasing the market power of firms. Although a detailed inquiry of market conditions in the EU is necessary, the merger, if it raises similar antitrust issues, would likely run afoul of EU merger regulations.”

German chemical company Bayer is trying to acquire the US seed, crop and agrochemical giant. It increased its offer for Monsanto by 2.5 percent to US$125 per share recently.

However Monsanto knocked back Bayer’s improved US$64bn offer of a takeover, claiming it was ‘financially inadequate’, but made a point of adding that it is open to constructive conversations with Bayer and any other potentially interested parties.