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Date of release: 11 May 2018
MERGER OF GLOBAL FIRMS BAYER AG AND MONSANTO COMPANY GRANTED SUBJECT TO DIVESTITURE OF BAYER'S COTTON BUSINESS 
The Competition Tribunal has approved a merger between Bayer Aktiengesellschaft (Bayer) and Monsanto Company (Monsanto), subject to conditions.

This follows an application from the merging parties requesting the Tribunal to consider the merger. The intermediate merger was originally approved subject to conditions by the Competition Commission (Commission) on 03 May 2017.

The conditions require the merged entity to divest and sell the entire global Liberty Link trait technology and the associated Liberty branded agro-chemicals business of Bayer, as well as Bayer’s SA Cotton Seed Business.

The conditions address competition concerns identified by the Commission in the market for the supply of GM cotton seeds as it is a merger to monopoly in South Africa. The proposed merger also results in the removal of potential competition as it removes the opportunity for Bayer to independently enter into South Africa and compete against Monsanto, particularly in the development and production of traits for seeds and the accompanying herbicides used in a number of agricultural markets. There are also several structural factors in this seed industry which are conducive for coordinated conduct which would be enhanced by the proposed merger through the prevalence of cross licensing agreements.

Further, the potential buyer of the divested businesses shall be required to commercialise the divested products in South Africa, or alternatively, oblige the potential purchaser to license the divested business to a South African third party to commercialise should the purchaser be unable to do so.

Bayer is active in the crop protection business in South Africa selling fungicides, insecticides, herbicides and seed treatment products among others. On the other hand, Monsanto is active in the supply of seeds, bio-technology traits and herbicides in South Africa. Both Bayer and Monsanto are also involved in research and development (R&D) for bio-technology traits and the discovery and development of active ingredients globally, which are critical inputs in the development of genetically modified (GM) seeds and agro-chemicals, respectively.

In terms of the agreement a trustee will be appointed to oversee the divestiture which will be to an independent third party. Divestiture will include distribution rights and other intellectual property rights owned or licensed to Bayer in South Africa. This is to ensure the development, production and sale of cotton in South Africa.

This merger is part of the global transaction between Bayer and Monsanto, which has been notified in other jurisdictions such as the USA, Russia, China and Brazil.

The Tribunal can be found on:
Twitter: @comptrib
Website: www.comptrib.co.za
Instagram: ComptribSA
Chantelle Benjamin
Communications Officer
Tel: (0) 12 394 1383
Cell: +27 (0) 73 007 5603
Twitter: @comptrib
E-Mail: chantelleb@comptrib.co.za
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ctsa@comptrib.co.za

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