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Critics Pan Bayer-Monsanto
Wednesday, November 15, 2017 11:39AM CST
By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Critics of agricultural consolidation joined forces Tuesday in Washington to release reports calling on the Department of Justice to reject the merger between Bayer AG and Monsanto Co.

Gathering at the National Press Club to air their grievances against the $63.5 billion merger were the Organization of Competitive Markets, the National Family Farm Coalition, the Ranchers-Cattlemen Action Legal Fund, Consumer Federation of America, Friends of the Earth, the Open Markets Institute and the group SumOfUs.

The groups also stated they delivered more than 1 million signatures on a petition to the Department of Justice calling on the department to block the proposed merger.

Bayer and Monsanto announced their merger in September 2016 and it continues to get regulatory scrutiny globally. The European Commission last week announced a March 5, 2018, deadline to complete its regulatory review of the company. Bayer already has agreed to sell some seed and herbicide businesses to BASF as a condition to completing the deal. Originally, the deal was valued at $66 billion, but Bayer revalued the merger deal at $63.5 billion last month, according to Reuters.

Combined, Bayer and Monsanto would be the world's largest integrated pesticides and seeds company, the EU noted in August when it began vetting the merger. At the time, the EU listed several preliminary concerns about market impacts. https://goo.gl/…

Multiple farm groups have written the Department of Justice over the past year expressing concerns about the merger as well.

Makan Delrahim, who heads the Antitrust Division at the Department of Justice, was confirmed in late September. The Trump administration has not made any official comments about the Bayer-Monsanto merger.

Because Bayer is based in Germany, the sale must also go through the U.S. Committee on Foreign Investment in the U.S. The companies stated last summer they were continuing to move through the CFIUS process, but there has been no announcement whether the merger has been approved by the committee, which does not release information on its proceedings to the public.

The main complaints Tuesday came from separate reports. The Consumer Federation of America released a report on the merger arguing it violates a Department of Justice guideline on horizontal mergers "by a wide, historically unprecedented margin." CFA argues the combined Bayer-Monsanto companies would create a "dramatic increase in market power" in a business that is already a "highly concentrated, vertically integrated, tight oligopoly on steroids."

The risk, CFA states, is the companies would raise prices, distort innovations in crops and squeeze both farmers and consumers. The report notes Monsanto accounted for $16 billion in ag sales in 2014 while Bayer's share was $12 billion. Combined, they would have more than $28 billion in ag sales while the next closest competitor, the newly combined DowDuPont, has about $18 billion in agricultural sales.

The groups Friends of the Earth, Open Markets and SumOfUs released a report questioning the influence of a combined Bayer-Monsanto company on data in agriculture. If the merger goes through, the groups stated, Bayer-Monsanto would be a major player in the field of data services for farmers.

The report cites the investments Monsanto and Bayer have made in the past five years to acquire more data companies, such as Monsanto's 2012 purchase of Precision Planting, and the 2013 purchase of Climate Corp. Bayer has also entered into a partnership with an aerospace company, Planetary Resources, that specializes in satellite imagery. Bayer sees the partnership as a way to focus on prescription applications for crops.

The merger critics conclude in their report that more understanding is needed about the possible unintended consequences of a single large agribusiness accumulating so much farming data.

"Big data provides large agrochemical companies the information they need to become even more powerful and profitable. In the end, we must question if this shift of data ownership really benefits farmers, or if it will simply allow companies to act as gatekeepers to important information that is ultimately used to improve their profit margins and to exclude competitors."

In a statement to DTN on Tuesday, Bayer said the merger with Monsanto is "about growth and bringing new innovation solutions to our customers" and will enable the company to offer farmers more and better technologies and products.

"As we've said from the beginning, this opportunity is about combining highly complementary businesses and bringing new innovative solutions to our customers," Bayer said in the statement. "We continue to welcome the review of regulatory authorities and have proactively entered into an agreement to divest certain businesses to satisfy potential regulatory concerns. We remain confident in our ability to obtain all necessary regulatory approvals and look forward to continuing to work diligently with regulators to support that process."

Monsanto had not yet responded to DTN's request for comment at the time this article was posted.

Bayer and Monsanto website for information on the merger: https://www.advancingtogether.com/…

Consumer Federation of America study: https://goo.gl/…

Big data study: https://goo.gl/…

(AG/SK)


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