Brussels believes that the takeover of Monsanto by Bayer could create a monopoly situation that would limit innovation.
The European authorities do not look favorably on the acquisition of Monsanto by Bayer. The proposed transaction, announced in September 2016 for a value of 66 billion dollars (56 billion euros), is the subject of an “in-depth investigation” by the European Commission. Brussels fears that this merger will distort competition and the emergence of a monopoly in an already highly concentrated market.
The project, if it were to see the light of day, would lead to the emergence of “the largest integrated firm in the world of pesticides and seeds”, recalls the Commission in a report. communicated. She believes that the merger could lead to the elimination of competition in several markets, which would result in “higher prices, lower quality, limited choice and slowed down innovation”.
Glyphosate
In fact, the activities of Monsanto and Bayer compete directly with each other. A merger would mean the end of this competition. Brussels thus has several reservations, in particular on glyphosate, a herbicide marketed under the name Round Up by the American Monsanto, the re-authorization of which is being debated at the Commission. It is the best-selling herbicide in Europe.
Bayer, on the other hand, produces ammonium glufosinate, one of the rare alternatives to glyphosate. The two groups risk being the only ones able to invest in the discovery of new active substances, in particular to circumvent the growing problem of seed resistance to existing pesticides. This is what worries the European Commissioners.
“Serious doubts”
“We need to ensure effective competition, in order to allow farmers to have access to innovative products, of superior quality and at competitive prices,” read the press release. We also need to make sure we maintain an environment in which businesses can innovate and invest in improved products ”.
The commissioners have until January 8 to close the investigation. Monsanto and Bayer have already made commitments to the Commission to allay its fears. But Brussels considers these commitments “insufficient to remove serious doubts as to the compatibility of the transaction with European regulations on mergers”.
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