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By Liz Crampton
Farmer and environmental groups discouraged by the Justice Department’s clearance of Dow Chemical Co. and DuPont Co.’s merger have set their sights on swaying antitrust regulators to block Bayer AG’s bid for Monsanto Co.
The agriculture industry has faced a wave of mergers that stand to reshape how farmers purchase inventory. Dow and DuPont was approved by the DOJ last month and ChemChina’s purchase of Syngenta AG passed regulatory muster in April. Bayer and Monsanto’s tie-up is the last of the trio of deals on the table.
During its routine investigation of Bayer and Monsanto, Justice Department lawyers have met with groups concerned about agriculture consolidation. The groups see the meetings as a chance to share their perspectives and offer guidance on how they think antitrust regulators should view the deal. Farmers and environmental activists say the companies’ combined control of seed and pesticide markets might increase prices.
“I think it’s going to be a bad deal for American farmers,” John Boyd, president of the National Black Farmers Association, a 109,000 member group, told Bloomberg BNA.
Boyd said he met with DOJ lawyers last month. Based on their line of questioning, he said he got the sense they’re focusing on what the merged company’s market shares would be in herbicides and pesticides.
The DOJ doesn’t comment on active investigations.
“They continue to say that these mergers will continue to be good for small-scale producers like myself,” Boyd said of merging companies like Dow and DuPont. “But history has told us that these mergers have hurt small-scale producers with the continued high cost of seed, herbicide, and pesticide.”
Bayer and Monsanto believe the deal will help their ability to innovate. Combined R&D hubs “are expected to result in significant and lasting benefits for farmers: from improved sourcing and increased convenience to higher yield, better environmental protection and sustainability,” the companies said in their merger announcement.
A spokeswoman for Monsanto didn’t comment specifically to the farmers’ concerns, but she pointed to a June earnings call in which CEO Hugh Grant said the combination with Bayer will help the company bring innovative offerings to growers.
“We remain encouraged by the advancement of other proposed combinations as our industry undergoes a healthy transformation to better serve the world’s farmers,” Grant said on the call. “And while other deals have their merits, we believe this merger is uniquely beneficial.”
Grant said the Bayer-Monsanto merger could benefit growers by accelerating innovation, delivering integrated solution tools, and expanding offerings to new crops and geographies.
A Bayer spokesman told Bloomberg BNA the companies are convinced their merger will deliver more choice, quality, and food security. “Growers worldwide will benefit from a broad set of solutions to meet their current and future needs, including enhanced solutions in seeds and traits, chemical and biological crop protection, and digital farming,” he said.
Opponents are telling DOJ officials to look closely at whether improved innovation is sure to come from the deal. A merged Bayer-Monsanto facing less competition would have less incentive to invest in new projects, they argue.
“We need them to start looking at this,” said Patty Lovera, assistant director of Food and Water Watch. “It’s the right way to look at these deals.”
The Justice Department has increasingly focused on how mergers could impact a new company’s ability to innovate. That reasoning was part of the DOJ’s thinking last year in suing to block the merger of Halliburton Co’s purchase of Baker Hughes. Officials were concerned the tie-up would lead to reduced innovation in the oil field services industry.
More recently, the DOJ cited a threat to innovation in moving to stop John Deere Co.'s purchase of Monsanto’s precision planting business. That deal was abandoned earlier this year ahead of trial.
To obtain U.S. antitrust clearance, Dow and DuPont agreed to divest some major assets. DuPont will sell off some of its herbicide and insecticide products, and Dow will give up plastics packaging units.
According to Lovera, those concessions aren’t enough to alleviate the deal’s competitive harms. “That was a pretty narrow prescription in terms of fixing what was wrong,” she said. “It’s indicative of, and this is not new to this administration, a very narrow look at what these mergers mean.”
Regulators are “missing the broader point” by focusing on explicit head-to-head product competition between merging companies instead of examining how all the agriculture mergers impact farmers on a large scale, Lovera added. “We don’t think that analysis is keeping up with the level of consolidation and control that we see in these markets.”
The DOJ’s “very specific divestment remedies” don’t provide comfort to farmers that officials understand the platform they could get locked into, she said. For example, if farmers purchase seeds from chemical companies, then they’ll also be obligated to buy pesticides and herbicides engineered for those seeds.
Greater consolidation means farmers have less options and will be forced to buy from a few industry players and absorb their higher prices, she said.
To contact the reporter on this story: Liz Crampton in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Fawn Johnson at email@example.com
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