AAI Says Government Remedy in Monsanto-Bayer Merger Raises Significant “Execution Risk”

The American Antitrust Institute responded to the U.S. Department of Justice’s (DOJ’s) approval of the mega-merger of agricultural biotechnology giants Monsanto and Bayer today, saying farmers and consumers should not bear the burden of a remedy that does anything less than fully restore competition.

The proposed remedy involves $9 billion in divestiture requirements and is the largest in U.S. enforcement history. It may also be the most complex divestiture remedy ever taken by the government. “The remedy raises significant issues of execution risk,” said AAI President Diana Moss. AAI explained that smaller rival BASF will acquire myriad assets in some markets that they did not formerly participate in and be expected to fully maintain them. The remedy attempts to create out of “whole cloth” a rival in BASF that will be required to fully restore competition lost by the merger. At the same time, Monsanto and Bayer will be attempting to deliver on their merger’s promised cost savings and consumer benefits, while they engage in complex and distracting divestitures and requirements. “The remedy is a tall order. AAI will be watching carefully to see if it succeeds,” said Moss.

In 2017, the AAI issued two joint letters (with Food & Water Watch and the National Farmers Union) to the DOJ explaining the potential adverse implications of the Monsanto-Bayer merger, including horizontal and vertical concerns covering virtually all aspects of the markets for crop traits, seeds, farm data, and agro-chemicals. The letters detailed why the merger is too big to fix and stated that the most effective remedy was for the government to block it.

AAI is unpacking the government’s complaint and consent order in this merger of unprecedented size, complexity, and adverse implications for competition, farmers, and consumers. Further analysis and commentary on the government’s enforcement action will be forthcoming.