Civil society calls for the establishment of a Treaty on Competition in the United Nations.
Brussels.- The Directorate General for Competition of the European Union approved on March 21 the controversial merger between Bayer AG (of Germany) and Monsanto (of the United States). The US Department of Justice will likely approve the decision soon after. Accepting this merger in Brussels and Washington will mean the consolidation of the last of the three mega-mergers of the seed and pesticide industry that have been in play since 2015.
While at the beginning of the merger frenzy six global companies controlled roughly two-thirds of the global seed market and more than 70% of the pesticide market, now there will be only four seed and pesticide companies left: Bayer-Monsanto, which will dominate; They are followed by Corteva Agriscience (a new spin-off, the result of last year's merger between Dow and DuPont); the company resulting from the earlier merger between Syngenta (based in Switzerland) and ChemChina (the ambitious Chinese chemical company expected to soon merge with the even larger Sinochem); and finally the fourth player on the field will be BASF, the German giant expected to acquire all or almost all of the assets that Bayer and Monsanto are shedding under pressure. When the waters calm, the "Big Six" genetic giants that dominated global seed and pesticide markets for most of the century will become the "Fearsome Four" and control the same proportion of the market.
From Bayer to BASF: Antitrust regulators have viewed the three mega-mergers as a difficult matter, and Bayer and Monsanto more of all. Last October, Bayer offered to sell most of its seed development and production operations along with most of its pesticides. Not enough, Bayer proposed to sell its vegetable business, and BASF stepped up to offer to buy these derivatives at a cost of approximately $ 7.8 billion.
Big data business: At the core of all mega-mergers has been to gain control of big data on agriculture. Big data management is behind new “digital DNA” technologies, including synthetic biology and genomic editing, which are transforming agricultural research and so-called “precision agriculture” platforms. Just today, Monsanto's venture capital arm announced that it would invest $ 25 million in a new crop gene editing company (Pairwise Plants) and appointed Monsanto's own vice president of global biotech operations as president. It was said a few weeks ago that Bayer was offering BASF an exclusive license for its digital technologies. And more recently, there have been rumors that under pressure from the US Department of Justice, Monsanto could give up its most important digital asset, Climate Corp., which it acquired in 2015 for $ 930 million.
"If Brussels and Washington think they can reassure farmers by forcing Bayer-Monsanto to divest its assets in favor of BASF, they are wrong," says Pat Mooney of the ETC Group. "There are no conditions under which these mega-mergers are good for farmers, peasants, or global food security, and moving their assets to BASF means nothing."
Microbes under the radar: The ETC Group is particularly concerned that antitrust offices have failed to monitor Bayer-Monsanto's growing dominance over agricultural microbes. In recent years, the two companies have done business with former enzyme companies such as Denmark's Novozyme (the world's largest synthetic enzyme sales company) and new companies such as Ginko Bioworks, Silicon Valley, (which uses synthetic biology and gene editing techniques to alter the DNA of microbes).
Agricultural microbes can be used with seed coatings or in soils. "This is new territory for big agribusinesses," says Jim Thomas of the ETC Group. "There is no reliable information on the market share, but we all see the Bayer-Monsanto combination as a potential monopoly in the microbial agricultural inputs sector."
Domino effect of agribusiness mega-mergers: According to the ETC Group, the potential monopoly of microbial inputs points to another important question that antitrust authorities rarely consider: Will these mergers create a domino effect in the agricultural input sector? "The Bayer and Monsanto research on microbial inputs directly threatens the fertilizer industry," explains Jim Thomas. "If nitrogen-fixing microbes and micronutrients are used to coat the seeds or are injected together with the seed at planting time, it will be in direct competition to the companies that sell fertilizers." In reaction to this and other changes in the agricultural sector, the second and fourth largest fertilizer companies in the world merged in early January to form Nutrient, today the number 1. The number 2 fertilizer company in the world, Yara (from Norway) is also dabbling in microbial input research, and so is the company that now ranks fourth, Mosaic.
Thinking about the package: Pat Mooney of the ETC Group considers the movements of the world's largest agricultural machinery companies, which already control almost half of the global market, worrying: “Deere & Co and the others have been working with data management massive since the early 1980s, making and breaking companies and joint ventures with the big seedlings and pesticide firms the last 10-15 years. They have the complete package of seeds, pesticides, fertilizers and irrigation systems in the field at the beginning of the planting season, and then harvest the crops at the end of the cycle. Its sensors and satellites have decades of accumulating data on crop yields, weather conditions and markets and are in the best position to sell information to farmers and even offer crop insurance. If such mergers are allowed, Mooney warns, the Fearsome Four will be targeted by the newly strengthened and extremely wealthy companies like Deere, ACGO, CNH and Kubota. "
Treaty on Competition at the United Nations: The ETC Group has followed the concentration of agricultural businesses since 1977 and considers the current mega-mergers as proof that governments have failed to manage the issue in the public interest. Therefore, the alternative is to negotiate a Treaty on Competition at the United Nations. "In most of the world, regulators know that they do not have the necessary tools to block current or subsequent mega-mergers," argues Neth Daño of the ETC Group. “When the WTO was established in the mid-1990s, almost all M&A activity was between the United States, Japan and Germany. OECD states did not want the WTO to interfere and countries in the global South did not trust it, so there are no international rules regulating the concentration of corporations and the impact this has on society, the economy, the health, the environment. Now the emerging markets of the South are more critical of corporations, especially agribusiness ones, for economic reasons, but they have no way to protect themselves from the wave of mergers. The WTO cannot and should not assume this role, but the UN does, and take into account other aspects that have not been considered in the national competition offices. "
The ETC Group and many other civil society organizations around the world are now calling for the negotiation of a United Nations treaty with a mandate broad enough to consider not only immediate mergers and acquisitions, but their long-term implications both in terms of control of livelihoods and ways of life, such as control of technologies. The ETC Group raised this issue during the Committee on Food Safety meeting last October in Rome, but governments were reluctant to act in the short term. The ETC Group and other civil society organizations will return to Rome in October to lobby on this issue, now that the mergers appear to be resolving, and will warn governments that the next round of mergers will be even more dangerous. The ETC Group and allies will also participate in the Science, Technology and Innovation Forum in New York in June, to raise their concerns about technology monopolies.
The ETC Group produced a background document on Monsanto-Bayer, microbial inputs and precision agriculture: http://www.etcgroup.org/es/content/documento-de-contexto-bits-y-microbios
More information and analysis of corporate concentration in the food system and its impacts on peasants, farmers and the various food systems, see:
International Panel of Experts on Food Systems, Too Big to Feed: Exploring the impacts of mega-mergers, consolidation and concentration of power in the agri-food sector, 2017.
Executive Summary: http://www.ipes-food.org/images/Reports/Concentration_ExecSummary.pdf
Full report: http://www.ipes-food.org/images/Reports/Concentration_FullReport.pdf