In December 2016 Monsanto shareholders voted in favour of the sale of the company to Bayer for US$66 billion, making it the largest-ever foreign corporate takeover by a German company.

The deal requires approval from about 30 regulatory agencies around the world. The Competition Commission of South Africa (CCSA) was the first to be officially notified of this global transaction on 1 February 2017, and conditionally approved the transaction on 3 May 2017 and made it public on the 8th May 2017. Other competition authorities elsewhere have been or will be notified. Both Bayer and Monsanto are major global manufacturers of agrochemicals and seeds, including genetically modified (GM) seed.

The merged entity will be the world’s largest supplier by sales of both seeds and pesticides, controlling up to 30 percent of the world’s commercial seed markets and 24 percent of the world’s pesticide markets. Bayer and Monsanto are major actors in South Africa’s seed and agrochemical industries. The ACB made submissions to the Competition Commission of South Africa (CCSA) urging it to consider the wider implications of these mergers beyond a narrow view of competition in segmented product markets. These include the entrenchment of the dominant technological platform in agricultural inputs, broader impacts on the agro-food system, agricultural biodiversity, input prices for farmers and knock-on effects on food prices, domestic innovation, and implications for just economic transformation and widening the base of productive activity.

The decision of the Competition Commission In its decision approving the merger between Monsanto and Bayer, the CCSA noted that the merger would produce a monopoly in the supply of GM cottonseed in South Africa. Over 90% of seed used in South African cotton production uses GM seed. A condition for the merger is therefore that the merged entity will have to “divest and sell the entire global Liberty Link trait technology and the associated Liberty branded agro-chemicals business of Bayer”. Furthermore, any business that purchases these assets must commercialise them in South Africa to produce competition in the market or to licence them to a South African third party for commercialisation anywhere in the world.

According to Mariam Mayet, Director of the ACB, “the CCSA’s condition for the disposal of Bayer’s GM cotton assets and its sale to another entity that will produce the seed and chemicals commercially in South Africa is still locked into the dominant technological paradigm. It does not go further than attempting to ensure competition in the production and distribution of GM technologies. No other farming alternatives are considered.”

The key drivers remain the same: increasing economies of scale, uniformity and standardisation in the food system. Small farmers face higher input prices, fewer choices in seed or crop protection, and lower output prices. Consumers are offered products that are small variations of standardised processed industrial foods built on cheap carbohydrates.

“With regard to public interest, the Commission allows for 20 retrenchments in accordance with the Labour Relations Act but the merged entity must create at least another 20 jobs over 3 years to maintain existing employment levels. The merged entity is required to carry on with existing corporate projects (not yet specified) for a period of three to five years, and must offer a 25% discount to small and emerging farmers for its “Seeds and Poncho value offering” for 3 years.”

According to the ACB, the impacts of the public interest conditions are minimal in relation to the immense long term damage these mergers wreak on our food systems through the strangling of alternatives to the corporate-finance driven GM, intellectual property and poisons model of agricultural development.

“An imposed discount on some corporate-structured ‘value offering’ sounds more like an advertising and promotions deal than a serious effort to redress past inequalities in land distribution and agricultural support. While such redress may not be the CCSA’s specific mandate, it should not be asking too much to expect some coherence in government policy in relation to providing support to widen the base of economic activity and opportunity”, says Dr Stephen Greenberg, head of research at the ACB.

Decision by the Competition Commission to conditionally approve Monsanto Bayer merger, 3 May 2017.

Read here.

The Bayer-Monsanto merger is just one of three mega-mergers taking place simultaneously in agricultural input supply. US chemical giants Dow Chemical and DuPont are set to merge, and China National Chemical Corporation (ChemChina) is to acquire Syngenta. The CCSA has already ruled in favour of the ChemChina acquisition of Syngenta and has completed its investigation of the Dow Chemical-DuPont merger, and is in the process of being finalised.

See further, Three Mega Mergers: Grim Reapers of SA’s Food and Farming Systems.

Read here.