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From Antitrust Law Daily, May 30, 2018

Canada Competition Bureau approves Bayer takeover of Monsanto with divestitures

By E. Darius Sturmer, J.D.

One day after the U.S. Department of Justice conditionally approved Bayer AG’s proposed acquisition of Monsanto Company, Canada’s Competition Bureau has followed suit. Today, the Competition Bureau announced that it has reached an agreement with Bayer AG requiring the company to divest numerous businesses in Canada to resolve concerns that the proposed transaction would have significantly harmed competition and innovation in Canada’s agricultural sector.

The deal, valued at $66 billion, was announced nearly two years ago and has been under regulatory review by numerous competition enforcement authorities internationally ever since. Bayer, based in Germany, is a global pharmaceutical, consumer health, animal health and crop protection science company. Monsanto is a global provider of agricultural products headquartered in St. Louis, Missouri.

After conducting an extensive review in coordination with other jurisdictions, including the Justice Department and the European Commission (EC), the Competition Bureau concluded that the proposed acquisition would likely substantially lessen and prevent competition in Canada with respect to the supply of canola seeds and traits, soybean seeds and traits, seed treatments that protect crops against nematodes, and carrot seeds. Canola seeds, the agency noted, are Canada’s highest-acreage crop, and the canola industry contributes $26.7 billion per year to the Canadian economy.

According to the Competition Bureau, the consent agreement addresses those concerns by requiring Bayer to sell its canola seed and traits business, soybean seed and traits business, carrot seed business, nematode seed treatment business, glufosinate-ammonium herbicide business, LibertyLink herbicide tolerance technology, assets related to the Centurion herbicide, and digital farming business in Canada.

Bayer has proposed BASF SE as the buyer of the assets under the agreement. The Bureau is actively reviewing the suitability of BASF acquiring the assets. The agency also noted that it will publish a comprehensive position statement on its review in the coming days.

Other jurisdictions. As noted above, the U.S. Department of Justice and EC have already cleared the deal conditioned upon consent agreement of their own.

The Justice Department’s settlement demanded the divestiture of businesses and assets collectively worth approximately $9 billion. Under that agreement, Bayer has to divest Bayer businesses that compete with Monsanto currently in 17 specific relevant product markets, including Bayer’s cotton, canola, soybean, and vegetable seed businesses, as well as Bayer’s Liberty herbicide business, a key competitor of Monsanto’s well-known Roundup herbicide. Bayer agreed to divest the divestiture assets to BASF SE, which has its own multi-billion-dollar crop protection business. The settlement also requires the divestiture of certain intellectual property and research capabilities, including "pipeline" R&D projects.

Under the EC settlement, Bayer committed to divest an extensive remedy package worth well over €6 billion. Bayer agreed to sell parts of its Crop Science business to BASF for up to €1.7 billion.

Companies: Bayer AG; Monsanto Co.; BASF SE

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