UCL study urges European Commission to block Bayer Monsanto merger

17 Oct 2017 --- The so-called mega-merger planned between seed giants Bayer and US-based Monsanto should be blocked under EU competition law, according to a major new study from University College London. Released yesterday (October 16), on World Food Day, the authors of the report claim that the European Commission should be obliged to block the merger, which is currently under an in-depth investigation, even on a narrow reading of EU competition law.

According to Friends of the Earth, which also supported the study, the analysis concludes that the "Baysanto" merger should be blocked because it would reduce competition, it concentrates even further an already tightly-packed agriculture sector as just three mega-companies (ChemChina-Syngenta, DuPont-Dow and Bayer-Monsanto) would own and sell about 64 percent of the world's pesticides and 60 percent of the world's patented seeds.

Other reasons include, it would raise prices and farmer dependency, one-stop inclusive packages of all services needed for agriculture (seeds, pesticides, and also "digital farming" products) would lock farmers into the company's value chain making them technologically dependent and facing price hikes in seeds and pesticides.

Asset selling will not solve the crisis and even if the Commission forces the companies to sell off some products, the market is already so concentrated that divesting particular products will not address the merger's negative effects on future competition in the seeds markets, the group claims.

It would stifle alternative businesses: The three mega-corporations controlling the global food value chain would "entrench the market power of the dominant players for the decades to come", thereby freezing more sustainable forms of agriculture.

The academics are also calling on the European Commission to broaden its investigation of the merger to take into account the full social and environmental costs, as they are likely to "lead to important risks for food security and safety, biodiversity... [and risks for] affordable food prices, high quality of food, variety and innovation."

"EU competition chief Margrethe Vestager has more than enough arguments to block the unholy alliance of Bayer and Monsanto and send a strong signal that the EU is prepared to stand up to these mega-corporations in order to protect farmers, citizens and our environment,” says Adrian Bebb, food and farming campaigner at Friends of the Earth Europe.

"The consolidation taking place between these agriculture giants would have major impacts on the future of our countryside, rural livelihoods and our environment. It is vital that the European Commission widens its investigation to ensure that we retain the possibility to move agriculture onto a sustainable and resilient footing to help counter climate change and halt biodiversity loss."

Earlier this year more than 200 civil society organizations called on European Competition Commissioner Vestager to stop the current wave of mergers in the agri-business sector. Almost 900,000 citizens have signed petitions calling for the Commission to act.

The research was prepared by Professors Ioannis Lianos and Dmitry Katalevsky from University College London's Faculty of Laws and was supported by wemove.eu, SumOfUs, Friends of the Earth Europe and Food and Water Europe.

In August, FoodIngredientsFirst reported how the merger proposal faces tough scrutiny as the Commission launched its comprehensive probe into the two agrichemical giants amid concerns over competition in relation to seeds, traits and pesticides. 

What concessions the multinationals may have to make to win over regulators is not yet clear, but it is highly likely there will be further action to allay the Commission’s fears over the competition.

The EC has officially opened what is known as a “Phase II” examination that will probe further as part of a regulatory process. Although this is a standard practice on proposed mergers of this size and scope, the EC has not been satisfied with its inquiry into the deal so far.

And just last week, German chemical company BASF signed an agreement to acquire significant parts of Bayer’s seed and non-selective herbicide businesses. Bayer is selling some parts of its business to ease the passage of the planned Monsanto-Bayer megadeal. The sell-off to rival BASF will likely smooth over these concerns easing the path for the impending takeover of the US seed maker.