Antitrust and Agriculture: Bayer, Monsanto, and BASF

By Josh Thompson

In September of 2016, German seed and chemical giant Bayer announced plans to purchase St. Louis-based Monsanto in what would be a $66 billion all-cash buyout. The deal, the largest of its kind in the fiscal year, would redefine the agricultural industry in its entirety. The companies claimed that the merger was imperative to their success in an industry under pressure from climate change and rapidly shifting dietary and demographic needs.

The move would make Bayer a global leader in agriculture, drawing scrutiny from legislators for potential antitrust violations. Original suspicion quickly became serious opposition when the European Union decided to launch a full-scale probe of the buyout in late August of this year. Antitrust authorities were concerned that the deal would “reduce competition in a number of different markets resulting in higher prices, lower quality, less choice and less innovation.” Bayer, however, was quick to respond—by selling off its practices that could become monopolistic.

On Friday, October 13, the German chemical group BASF announced plans for a €5.9 billion purchase—the largest in the organization’s 152 year history. The group will acquire major pieces of Bayer’s seed and herbicide businesses, two facets of the company that posed clear challenges to the bid for Monsanto. In a transaction that is beneficial to both sides, Bayer will unload many of its culpable business practices while BASF will gain an already highly operational, highly specialized unit to compete in the agricultural industry. The deal, which will become official immediately pending the approval of the Bayer-Monsanto merger, will also allow the chemical group to finally enter the genetically modified seed business in the United States, a field that has only recently begun to shed environmental and ethical taboo.

For Bayer, there is hope that this move will call off the trust-busting probe and accelerate its acquisition of Monsanto. While the decision does mitigate potential unfair business practices, the effect that the merger would have on consumers and researchers alike is still ambiguous. For now, it remains to be seen whether more assets will have to be unloaded if the merger is to receive regulatory approval from U.S. and European Union authorities. Nonetheless, it is strikingly clear that the agriculture sector is facing the potential for massive upheaval if the powerhouse is approved in the coming months.