The European Union has approved the controversial proposed buyout of US agri-giant Monsanto by German chemical firm Bayer after securing concessions worth more than US$7.4 billion in order to win approval.
"We have approved Bayer's plans to take over Monsanto because the parties' remedies, worth well over six billion euros (US$7.4 billion), meet our competition concerns in full," Commissioner Margrethe Vestager, the EU's anti-trust chief, announced on Wednesday.
"We have made sure that the number of global players actively competing in these markets stays the same," said Vestager. "That is important because we need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices,” she added.
Brussels launched an in-depth investigation in August into the US$66-billion (56-billion-euro) deal, which would create the world's largest integrated pesticides and seeds company and raised alarm among activists. The takeover has been watched by rivals, who were fearful that the number of players in the business of selling seeds and pesticides will shrink further and give one company a suffocating grip on the food chain.
Monsanto in September accepted Bayer's offer, in which it also assumes US$9 billion in debt, in a move affecting anything from tomatoes and cucumbers to the use of pesticides across the globe.
The move would see the firm hold a share of around 25 percent of the agrochemical market in Argentina, totalling US$2.5 billion, La Nación reported.
The European Commission, which serves as the powerful anti-trust regulator for the 28-nation European Union, at the time cited concerns it could reduce competition in key products for farmers.
Brussels made the decision despite strong opposition by environmentalists who fear that the deal gives too much power to the world's leading manufacturers of genetically modified organisms (GMOs) and the controversial weedkiller glyphosate.
US regulators still to decide
The tie-up has already won approval by Chinese authorities, but still awaits the crucial approval by US regulators, which have voiced concerns.
The EU has won several concessions from Bayer including the announced sale in October by Bayer of parts of its agrochemical business to German rival BASF.
That deal would see Bayer sell the lion's share of its crop seeds units and its glyphosate herbicide business to BASF for 5.9 billion euros (US$7 billion).
Earlier this month, BASF also committed to buying Bayer's vegetable seed business in a last minute concession to Brussels.
Bayer chief executive Werner Baumann said last month that if it receives the Commission's go-ahead, the Monsanto deal could be completed sometime in the second quarter.
Baumann said that "the European Commission's approval is a major success and a significant milestone." He said the companies were still working with U.S. authorities on the deal, which they hope to close in the second quarter of 2018.
Environmentalists were less enthused, claiming that it still amounted to granting Monsanto and Bayer full control on the food chain.
"This is a marriage made in hell," said Nick Flynn, legal director of the Avaaz environmental campaign group. "Now the fight moves to the US where regulators can still stop this."
In a letter to Vestager, the competition commissioner, activists from Friends of Europe warned against the merger due to its consequences for the environment.
"Blocking this deeply unpopular merger would be a big win for the EU – over a million citizens have called on EU competition chief Margrethe Vestager to block this merger from hell," the activists said in a statement.
The EU acknowledged the opposition but insisted that it could "assess the merger solely from a competition perspective."
"This assessment must be impartial and is subject to the scrutiny of the European Courts," it added.
Bayer's takeover is the latest in a wave of consolidation in the competitive and politically sensitive agrochemicals sector.
China's state-owned ChemChina has completed its US$43-billion takeover of Switzerland's Syngenta, and the nearly US$150-billion tie-up of US giants Dow Chemical and DuPont has also been completed.