Published on Mar 09, 2018
The European Commission (EC) is on track to conditionally clear the proposed Bayer/Monsanto merger on March 21, according to sources familiar with the matter.
The date is sooner than many expected because the EC has until April 5 to decide. But European antitrust enforcers, in coordination with their U.S. counterparts at the DOJ, have been successful in extracting divestitures and other concessions from Bayer that the EC enforcers think address problems with the deal, the sources said.
The EC’s Advisory Committee, which is made up of representatives of member states’ competition authorities, is scheduled today to give its opinion of the commission’s draft of a conditional clearance, one of the sources said. The committee’s opinion, though, isn’t binding on Margrethe Vestager, the European commissioner on competition, whose view holds the most sway in merger reviews.
DOJ talks progress. Meanwhile in the U.S., DOJ staff and the companies continue to negotiate with Bayer and BASF, the major proposed divestiture buyer, on what assets are needed to transform BASF into a viable No. 4 provider of pesticides and seeds for row crops. Monsanto this week decided to sell BASF additional cotton and soybean germplasm, the living tissue from which plants are grown, a third source said.
The germplasm would fill gaps in the seed product lines BASF originally agreed to buy from Bayer, the source said. The cotton germplasm, for example, would grow five cotton seed lines BASF wouldn’t otherwise have, and the soybean germplasm would produce seeds that would do best in the U.S. grain belt, an area that stretches from southern Minnesota and Michigan to the northern regions of Tennessee and Arkansas, the source said.
DOJ staff also in the past 10 days contacted people in the seed industry to get their views about how the merger would affect competition, the third source said.
BASF and vegetable seeds. As both the EU and U.S. antitrust reviews move toward conclusion, Bayer on Wednesday said it was in exclusive talks with BASF to sell its vegetable seeds business to its rival.
Bayer’s and Monsanto’s overlapping vegetable seed offerings have been a source of antitrust concern in the EU and U.S. The divestiture would be in addition to BASF agreeing to buy for 5.9 billion euros ($7.3 billion) from Bayer crop-protection and seed businesses.
A Bayer spokesperson declined to discuss progress with the EU and U.S. reviews but repeated the company’s guidance that “we remain confident in our ability to obtain all necessary regulatory approvals” and that Bayer expects the deal will close in the second quarter.
A BASF spokesperson said that a definitive agreement with Bayer on the proposed vegetable seeds acquisition hadn’t been reached yet and that antitrust enforcers “have not yet made their final decisions on the Bayer/Monsanto transaction.”
BASF this week did notify to the EC the original divestiture agreement and the contemplated vegetable seeds business sale. If the EC conditionally clears Bayer/Monsanto, it still can tell the companies they have to wait until antitrust investigators review the divestitures before closing the deal.
Spokespeople for the EC, DOJ and Monsanto declined to comment.
Deal opponents ramp up lobbying, prepare backup plans. The deal’s critics, sensing impending defeat in the EU and fearing the U.S. may follow suit, are intensifying lobbying efforts and developing contingency plans.
Vestager told European environmental and grassroots groups in a 50-minute meeting on February 27 that she was bounded by antitrust law and that the commission blocked very few deals, said Anne Isakowitsch, campaign manager for SumOfUs.org, one of the meeting’s participants.
“My feeling is that this [deal] will get through” the EC, Isakowitsch told The Capitol Forum after the meeting.
In the meeting, Vestager said she expected whatever decision she made on the merger to be appealed to the EU’s court in Luxembourg, said Isakowitsch, who added that SumOfUS.org is considering such an appeal. But these cases take years and the companies can close their transaction in the meantime.
Ninety-four percent of farmers surveyed by grassroots agricultural groups are concerned about the merger, according to a poll released yesterday by Friends of the Earth, a deal opponent. Ninety-two percent of those in the survey, which is based on 957 responses, feared the merged company would control too much data on farming practices and use its dominance in one product category to push sales of other products.