The Competition Commission has approved, with conditions, pharmaceutical group Bayer’s proposed acquisition of agrochemical and agricultural biotechnology corporation Monsanto.
The commission, however, identified competition concerns in the market for the supply of genetically modified (GM) cotton seeds in South Africa, saying the merger will create a monopoly in this market.
The proposed merger also results in the removal of potential competition as it removes the opportunity for Bayer to independently enter South Africa and compete against Monsanto, particularly in the development and production of traits for seeds and the accompanying herbicides used in many agricultural markets.
In a statement issued on Sunday, the commission said there are several structural factors in the seed industry which are conducive for coordinated conduct which would be enhanced by the proposed merger through the prevalence of cross licensing agreements.
The commission has imposed conditions for the merged entity to divest and sell the entire global Liberty Link trait technology and the associated Liberty branded agrochemicals business of Bayer.
“The commission has also imposed a condition that requires the potential buyer of the divested businesses to commercialise the divested products in South Africa, or alternatively, oblige the potential buyer to license the divested business to a South African third party to commercialise anywhere in the world should the buyer be unable to do so,” the statement said.