The proposed merger between global crops and food production concerns with significant GM elements, Bayer Aktiengesellschaft and Monsanto Company, has been approved in South Africa by the Competition Tribunal with conditions.
The conditions require the merged entity to divest and sell the entire global Liberty Link trait technology and the associated Liberty branded agro-chemicals business of Bayer, as well as Bayer’s SA Cotton Seed Business. This was listed in a statement released by the Competition Commission today.
This merger is part of the global transaction between Bayer and Monsanto, which has been notified in other jurisdictions such as the USA, Russia, China and Brazil. The merger initially approved by the Competition Commission early last year with conditions. Those conditions have been confirmed by the tribunal.
The statement said the conditions address competition concerns identified by the Commission in the market for the supply of GM cotton seeds as it is a merger to monopoly in South Africa.
The statement added that the proposed merger also results in the removal of potential competition. “It removes the opportunity for Bayer to independently enter into South Africa and compete against Monsanto, particularly in the development and production of traits for seeds and the accompanying herbicides used in a number of agricultural markets.
“There are also several structural factors in this seed industry which are conducive for coordinated conduct which would be enhanced by the proposed merger through the prevalence of cross licensing agreements.”
The statement added that the potential buyer of the divested businesses shall be required to commercialise the divested products in South Africa, or alternatively, oblige the potential purchaser to license the divested business to a South African third party to commercialise should the purchaser be unable to do so.
Bayer is active in the crop protection business in South Africa. It sells fungicides, insecticides, herbicides and seed treatment products among others. And Monsanto is active in the supply of seeds, bio-technology traits and herbicides in South Africa.
Te Commission noted that both Bayer and Monsanto are also involved in research and development (R&D) for bio-technology traits and the discovery and development of active ingredients globally, which are critical inputs in the development of genetically modified (GM) seeds and agro-chemicals, respectively.