‘Global merger of Bayer CropScience and Monsanto needs Indian approval’

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The global merger of Bayer CropScience and Monsanto cannot happen unless the Competition Commission of India (CCI) approves their merger in India, according to a top official of Bayer in India. Richard van der Merwe, Vice-chairman and Managing Director of Bayer CropScience India told reporters here that the rule of approval by CCI applies to all mergers and is not specific to the Bayer-Monsanto deal. He expects the CCI to give the green light by May this year.

Van der Merwe said that if the global merger is brought about without CCI approval, the commission could impose a penalty of one per cent of turnover or assets of the combined entity, whichever is higher. The merged entity needs to seek approvals from 30 jurisdictions, of which it has obtained consent from 14. Explaining the need for approval by India, the first chairman of CCI, Vinod K Dhall — now a consultant — told this writer that if globally merged entities operate as distinct companies in India, they would be able to influence their pricing, manufacturing and distribution policies by virtue of thier control in ways that could impede competition.

In September 2016, Bayer CropScience announced the acquisition of Monsanto, an American MNC which is the global leader in agricultural biotechnology. This is expected to make the combined entity very strong in the field of transgenics. India has been fussy about genetic medication (GM) technology, and has withheld approval for a GM mustard hybrid even though the regulator — Genetic Engineering Appraisal Committee (GEAC) — had recommended approval for its mass cultivation last May after determining it was safe for humans, animals and the environment.

India’s agriculture ministry has been singing praises of organic farming, though widespread usage would not be able to meet the demand for food. According to van der Merwe, there is a role for organic farming, but it is a niche role; it cannot feed 10 billion people, which is the expected size of the global population by 2050. Pitching transgenics as the agricultural technology of the future, he said countries like India and those of Africa would have to rely on new technologies because of shrinking arable land owing to urbanisation, the pressure on natural resources and uncertainties in weather created by climate change.

“Europe will still take 20 years before they look at GM. They are in a lucky situation — they are wealthy,” van der Merwe said. He was referring to the European Union’s opposition to the cultivation of GM crops within its borders which is an example cited by Indian anti-GM activists. Europeans can be choosy because they have the income to indulge in fads like organic food, he added.

Van der Merwe said much of Africa would go hungry without GM corn. As a South African he has been eating GM corn, he said, but “I have not developed horns” referring to fear-mongering of GM technology by anti-GM activists. Bayer has a strong portfolio of fungicides, insecticides and herbicides. It has a small seed business — hybrid rice, cotton, millets (bajra, ragi and jowar), hybrid mustard and vegetable seeds. To obtain regulatory approval it has sold the off-patent glufosinate herbicide brand Basta, along with its production facilities to BASF.

Monsanto India has aimed for CCI approval by shedding its Bt cottonseed business, which had brands like Paras Bramha. But it retains the insecticidal Bt traits business which has more than 90 per cent share of the Indian market. It has an overlap with Bayer in vegetable seeds. Van der Merwe said that this should not matter as there were a few hundred seed companies. Commenting on price control on Bt cottonseed and the cap on Bt trait fees, van der Merwe said there was a fine line between regulation and new investment. Bayer Cropscience sells mustard hybrid seeds in India obtained through conventional breeding. Using GM technology for mustard hybridisation had “substantial benefits,” van der Merwe said.

Source: Business Standard.

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