The Department of Justice on Tuesday approved Bayer’s $66-billion acquisition of Monsanto, completing a two-year approval process for the mega-merger that spanned several countries. The combined company will be the largest agrochemical and seed company in the world with about $48 billion in annual sales.
The acquisition was initially announced in September 2016 and has already been approved by regulators in the European Union, Russia, Brazil, and India. It was opposed by numerous farm, consumer, environmental, and labor groups.
As a condition of its approval, the DOJ will require Bayer to divest its seed and herbicide divisions to fellow German agrochemical company BASF. The divestments, valued at about $9 billion, “will fully resolve all horizontal and vertical competition concerns,” said the DOJ in a statement. “As a result, American farmers and consumers will continue to benefit from competition in this industry.” The divestment is the largest in U.S. antitrust enforcement history.
But news of the divestment didn’t assuage opponents’ concerns. “The divestiture generally sold the weaker assets — Bayer’s vegetable seeds and precision agriculture technology [and data], which pale in comparison to Monsanto’s rival products,” said Food and Water Watch executive director Wenonah Hauter in a statement. “Even with the divestiture, BASF will not be able to rapidly absorb these new business lines and create a credible competitor in the hyper-consolidated seed market.”
Bayer estimates that the divestment process and conclusion of the deal will take about two months. Bayer’s CEO Werner Baumann said in a statement that the “[r]eceipt of the DOJ’s approval brings us close to our goal of creating a leading company in agriculture. We want to help farmers across the world grow more nutritious food in a more sustainable way.”
Consolidation has reorganized the agrochemical and seed sectors in recent years. Last year, regulators approved the mergers of ChemChina and Syngenta, and Dow and Dupont. The approval of Monsanto’s acquisition by Bayer leaves just four companies, including BASF, in control of the majority of the world’s agrochemical research and sales. Bayer-Monsanto will control about a quarter of the global seeds and pesticide markets.
Farm advocates have warned of the potential consequences of continued consolidation for farmers. “This extreme consolidation drives up costs for farmers and it limits their choice of products in the marketplace,” said National Farmers Union president Roger Johnson in a statement. “It also reduces the incentive for the remaining agricultural input giants to compete and innovate through research and development.”
The Organization for Competitive Markets, an antitrust advocacy group, called the DOJ’s approval process “pointless” in a statement, adding that the agency “has just authorized a monopoly.” Navina Khanna, director of the HEAL Food Alliance, said that the merger’s approval “demonstrates that our current anti-trust laws favor corporate profits over people and the planet.”
Advocates also argued that the merger could have negative environmental consequences. “Independent farmers nationwide are deeply concerned that this merger will increase pressure to practice chemical-dependent farming,” said Khanna in a statement. “We can anticipate that the heavy doses of herbicides and pesticides will harm wildlife, contaminate neighboring fields, and threaten the drinking water and health of rural communities.”
More than 93 percent of farmers polled in a March survey reported that they were concerned about the deal between Bayer and Monsanto. The farmers worried that a combined Bayer-Monsanto would raise input prices and control a greater share of farm data. On-farm data collection has become omnipresent in large-scale commodity farming, assisted by high-tech tractors and other farm equipment. DuPont, Monsanto, Syngenta, and other agrochemical and seed companies have each acquired data companies to expand their data collection.
Bayer and Monsanto together control nearly 60 percent of the U.S.’s cotton seed, and Monsanto alone controls over 80 percent of the corn and 90 percent of the soybeans grown in the U.S. The joint company’s power extends beyond commodity crops; a coalition of farm, consumer, and rural groups estimated in August 2017 that Bayer-Monsanto would also control more than 40 percent of processed spinach, 30 percent of the cantaloupe crop, and 29 percent of carrot varieties.