Bayer-Monsanto merger dubbed 'the Facebook of farming' as EC urged to oppose deal

By David Burrows

- Last updated on GMT

©iStock/rawpixel
©iStock/rawpixel
You wouldn’t want to be Margrethe Vestager at the moment. In the next few days (perhaps as early as tomorrow), the European Commission’s competition chief will publish the conclusions of her investigation into the proposed €55 billion deal between German pharmaceuticals firm Bayer and US seed producer Monsanto. And campaigners are getting twitchy that the decision might not fall their way.

Dozens wrote to Vestager today urging her not to give the green light for a company they say will become “the Facebook of farming”.​ There is a lot not to like about this particular mega-merger, which will create the biggest player in the field of data platforms and data collection.

“Bayer-Monsanto will be able to combine its data businesses with its seeds, traits and chemicals to create a new unprecedented platform,”​ the NGOs wrote. “This will be a way to leverage the sale of one product into another, integrating all of its businesses and thereby raising barriers to innovation or disruption from competitors.”

Quality concerns 

Vestager said from the outset that she had “concerns”​ that prices will go up, quality will go down, choices will dwindle and innovation will stagnate. Indeed, sales of seeds and agrochemicals could be “bundled”​ together.  There is also considerable public opposition – a million people signed a petition delivered to the commissioner, whilst a February poll of consumers in Germany, France, Spain, Denmark and the UK (by YouGov for Friends of the Earth Europe) showed 47% of shoppers had "serious" or "very serious" concerns about the whole thing.

But that doesn’t mean Vestager won’t wave the deal through. In fact, Reuters reported last month that the merger is “set to win conditional anti-trust approval”,​ according to “two people familiar with the matter”. ​Take a look at the commission’s record on similar deals and it would be no surprise. Only 0.4% of merger applications in the past 27 years have been rejected, according to research commissioned by Corporate Europe Observatory.

"The commission has legitimised its pro-concentration stance by referring to synergy effects, such as lower costs and thus lower prices for consumers, product innovation and the displacement of inefficient management structures,"​ Angela Wigger, lead author of CEO’s study and an associate professor at the department of political science at Radboud University in the Netherlands, told me last year. “These companies are pushing at an open door.”

Good deal all round?

Whether Vestager lets Bayer and Monsanto through with all the others comes down to one thing: are consumers getting a good deal? But how do you define a good deal?

Cheaper food would probably be at the top of most people’s list and big mergers are taking place up and down the food supply chain in order to drive out costs (think Amazon and Whole Foods and Kraft’s failed approach to Unilever). Super-sizing a company certainly bolsters the economies of scale but there is an argument that, whilst still the top priority for most consumers, price is certainly not the be-all and end-all. Look at the rising popularity of organic food, for example, or how animal welfare concerns have rocketed up the agenda. Fair pricing is another issue that people are buying into in greater numbers than ever.

And at the same time, confidence in the world’s biggest food brands is far from shock-proof. The Edelman Trust Barometer in 2016​, for example, showed trust levels at around 63% for the food industry, with food and drink manufacturers at 60%. But there are degrees of trust and this is where the findings become more concerning for Europe’s food companies: only one in five people completely trust food and drink processors; and the same number don’t trust them at all (in France it was actually 8% versus 37%). The remaining 60% can easily swing either way.

So, how do food companies make sure it’s back in their favour? Eighty per cent of those surveyed said they are more than happy for businesses to make profits but at the same time they need to improve the economic and societal conditions of where they operate. We’re talking about protecting the environment, reducing poverty, addressing income equality and the like.

Future of food production

The world’s biggest food brands are pass masters at talking a good game on these topics under the umbrella of “purpose”. Indeed, Danone boss Emmanuel Faber has suggested that “a revolution is cooking. What are we going to do about it?”​ he asked at a Consumer Goods Forum meeting in June last year. He said the food system was “broken”,​ noting the “time bomb”​ of wealth concentration and the “social injustice”​ of food inequality.

Hardly surprising, then, that the Baysanto deal is seen by some as a huge moment not just in competition law but in how the European Commission sees the future of food production.

Olivier De Schutter, co-chair at the International Panel of Experts on Sustainable Food Systems (IPES-Food) and former UN special rapporteur on the right to food, told EUobserver recently​ that if it’s cheap food the commission is after then the deal can appear attractive. However, he argued, surely its time (before it’s too late) to adopt a “richer notion”​ and move to “just prices rather than low prices”. 

IPES-Food has research showing that food systems are making people sick: "The health impacts generated by food systems are severe, widespread and closely linked to industrial food and farming practices,” ​the panel has concluded. Throw in the concerns about glyphosate, one of Monsanto’s flagship products, and it’s easy to see why Vestager’s decision is a biggy.

"Our assessment is limited to competition issues, has to be impartial and is subject to the scrutiny of the European courts," ​she tweeted last year in response to mounting pressure to call the whole thing off. In February she tweeted a pic of her with a big box of those million or so signatures. However, it’s her next announcement that everyone is waiting for.

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