CCI sees Bayer-Monsanto deal impacting competition, starts public scrutiny

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The Competition Commission of India (CCI) has launched a public scrutiny of the finer details of the proposed $66 billion Bayer-Monsanto deal, as it feels that prima facie the deal has, or likely to have an major adverse effect on competition. The Bayer-Monsanto deal would create the world’s largest seeds and pesticide firm.

CCI places a deal for public consultation if it is of the “prima facie opinion that the combination has, or likely to have an appreciable adverse effect on competition”. Prior to this, CCI had launched similar public scrutiny in the case of the Ranbaxy-Sun Pharma and Holcim-Lafarge merger deals, among others.

The comments with respect to the Bayer-Monsanto deal need to be submitted to CCI, along with supporting documents on how the merger can adversely impact the concerned person or entity, the competition watchdog said in a public notice. It further said that “the Commission is not likely to consider unsubstantiated objections”.

Bayer said in a statement that publication of this form on an acquirer’s website is a regular step in a Phase-II investigation in India and does not in any way prejudge the outcome of the Proposed Combination. Bayer continues to fully cooperate with the CCI, while Monsanto declined to comment on the move. The deal between Bayer-Monsanto, both of which have strong presence in India, was announced in September 2016.

On September 14, 2016, Bayer and Monsanto entered a definitive agreement and plan of merger under which the entire shareholding of Monsanto would be acquired by Bayer. The share price of Bayer Cropscience Ltd, the Indian-listed arm of the global major was quoted at Rs 3,937.4 per share on September 14 while it closed at Rs 4,569.6 per share.

In case of Monsanto India Ltd , the Indian arm of the multinational, the share was quoted at Rs 2,329.3 per unit on September 16 while it closed at Rs 2,499.4. As a result of the proposed combination, Monsanto will become a wholly-owned subsidiary of Bayer.

Bayer operates in pharmaceuticals, crop science, consumer health and animal health with a broad range of products in each spanision. Monsanto is a sustainable agricultural company engaged in the production of agriculture and vegetable seeds, herbicides/weed control solutions.

As per a notice filed by Bayer before the CCI in October 2016, the “proposed combination raises no competitive concern in any of the overlap products”. In India, both entities have presence in production and sale of vegetable seeds, cotton seeds as well as in production and sale of non-selective herbicides, according to that notice.

The parties believe that the proposed combination does not give rise to competition concerns regardless of the manner in which the markets are delineated. “The parties are engaged in complementary business practices and the proposed combination seeks to capitalise on the synergies arising as a result of the complementaries. The parties, therefore, believe that it is not necessary to definitely conclude on market definition for the purposes of proposed combination,” as per Bayer. Bayer expects the proposed combination to close by early this year.

Source: Business Standard

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