Bayer Monsanto
WASHINGTON, D.C., U.S. — The U.S. Department of Justice on May 29 said Bayer AG must divest businesses and assets collectively worth approximately $9 billion before the government agency will approve a proposed $66 billion acquisition of Monsanto Co.

“This comprehensive structural solution to significant horizontal and vertical competition concerns — the largest merger divestiture ever required by the United States — preserves competition in the sale of these critical agricultural products and protects American farmers and consumers,” said Makan Delrahim, assistant attorney general in the Antitrust Division. “We commend the parties for working with the Antitrust Division to resolve our concerns on behalf of American consumers.”

The announcement came after the DOJ’s Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the Antitrust Division filed a proposed settlement that, if approved by the court, would resolve its competitive concerns with the potential merger. 

The DOJ said that the without the agreed-to divestitures, the proposed merger of the two ag giants likely would result in “higher prices, lower quality, and fewer choices across a wide array of seed and crop protection products.” The department also claimed that the merger may threaten to stifle the innovation in agricultural technologies that “has delivered significant benefits to American farmers and consumers.”

Under the terms of the proposed settlement, the DOJ has ordered Bayer to divest its cotton, canola, soybean, and vegetable seed businesses, as well as Bayer’s Liberty herbicide business, a key competitor of Monsanto’s Roundup herbicide.

Additionally, the settlement requires structural divestitures to remedy the competitive harm that the DOJ believes would result from the vertical integration of certain significant Bayer seed treatment businesses with Monsanto’s leading seed businesses.

“Additionally, because Bayer and Monsanto currently compete to develop new products and services, the settlement requires the divestiture of certain intellectual property and research capabilities, including ‘pipeline’ R&D projects,” the DOJ said. “Finally, in order to fully prevent competitive harm from the merger, the settlement requires the divestiture of additional complementary assets that are needed to ensure that BASF has the same innovation incentives, capabilities and scale that Bayer would have as an independent competitor including, most notably, Bayer’s nascent ‘digital agriculture’ business.”

Bayer expects to sell the agricultural businesses and assets to chemical giant BASF.

“Receipt of the DOJ’s approval brings us close to our goal of creating a leading company in agriculture,” said Werner Baumann, chief executive officer of Bayer. “We want to help farmers across the world grow more nutritious food in a more sustainable way.”

The proposed settlement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Kathleen S. O’Neill, Chief, Transportation, Energy & Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000, Washington, D.C.  20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.