Bayer’s takeover of Monsanto: Indian farmers send their objections to Competition Commission

On 25 January, the Indian Coordination Committee of Farmers Movements (ICCFM), placed on record their objection with the proposed acquisition of Monsanto by the German firm Bayer.

Here is the full text of the letter.

All Indian Coordination Committee of Farmers Movements

Road No. 2, A – 87, Mahipalpur Extension, New Delhi – 110 037, IndiaTel:+91-9899435968 ; Email: yudhvir55@yahoo.com 

The Secretary,                                                                                                                          25.01.2018

Competition Commission of India,

New Delhi - 110001 

Dear Madam/Sir,

Subject: Our objection to the Proposed Combination between Bayer AG and Monsanto and request for extension of 15 days notice for public participation.

We the farmers in India as Individual Farmers,  Farmers Groups, Women Farmers, Small farmers, Young Farmers, Farm Workers, Landless Labourers have come together to place on record our objections pertaining to the Notification issued by the Competition Commission of India under Section 29(2) of the Competition Commission Act, 2002, inviting objections/ comments/ suggest with regard to the combination of Two Corporate Giants across the Globe viz,  between Bayer AG, Kaiser-Wilhelm-Allee, 51368, Leverkusen, Germany (hereinafter ‘Bayer’ or ‘Acquirer’) and Monsanto Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, County of New Castle (hereinafter ‘Monsanto’ or ‘Target’, and collectively with Bayer as ‘Parties’).

The signatories hereunder are members of All India Coordination Committee for Farmers’ Movements (ICCFM) and South Indian Coordination Committee for Farmers’ Movements (SICCFM) and we represent 12 farmers’ organizations across India representing millions of peasants, small and medium size farmers, landless people, rural women and youth, indigenous people, migrants and agricultural workers. We defend peasant agriculture for food sovereignty as a way to promote social justice and dignity and strongly oppose corporate driven agriculture that destroys social relations and nature.

We consider that the acquisition of Monsanto by Bayer not only causes but also likely to cause an appreciable adverse effect on competition within India. We request the Commission to call for the records from these two companies regarding their market concentration and study the overall reach of these two companies put together in the market and assess the percentage of their shares objectively and independent of the projections given by the Parties in Form IV, before arriving at any conclusions. The Commission should carry out this investigation to determine the questions whether the acquisition or the combination of these two giant Corporates would cause adverse effect on competition within India.

It is important to place on record the study conducted by the Friends of Earth, Europe led by Ioannis Lianos, Professor of Global Competition Law and Public Policy and Director of the Centre for Law, Economics and Society (CLES) at University College London (UCL), concludes that even on a narrow reading of EU competition law, the merger between US-based agro-chemical and biotech company Monsanto and German ‘life science’ company Bayer should not be permitted. The legal study sets out five main reasons why EU competition law requires that the merger be blocked.  The copy of the said document is enclosed herewith.

In addition to the issues raised in the said study mentioned supra and the objections submitted by many other individual farmers, farmers organization and farmers collective, we also like to highlight the certain discrepancies in the combination of Bayer and Monsanto as published in the Notification dated 5^th January 2018.

In India, Bayer and Monsanto, as per the assertions given by the Parties in Form IV, prior to the closing of the Proposed Combination operate in the 5 Segments in terms of Products, viz, 1. Crop Production, 2. Agricultural Seeds, 3. Vegetable Seeds, 4. Environmental Science and 5. Traits and Technology. The Crop Productions again has 6 Sub Segments, Agricultural Seeds has 5 Sub Segments, Vegetable Seeds has 22 Sub Segments , Environment Science has 5 Sub Segments and Traits and Technology has 1 Sub Segment.

In the Crop Production Segment, both the parties have one Sub Segment overlapping i.e., Non –selective herbicides.

In Agricultural Seeds Segment, both the parties have one Sub Segment overlapping i.e. Cotton Seeds.

In Vegetable Seeds Segments, both the parties have 13 Sub segments overlapping, i.e., Cabbage, Cauliflower, Cucumber, Eggplant, Bitter Gourd, Bottle Gourd,  Melon, Okra, Onion, Hot Pepper, Sweet Pepper,  Tomato and Watermelon. 

BAYER AND BASF

Though the Parties claim that the Bayer has executed an agreement with BASF on 13 October 2017 to divest its global glufosinate ammonium business and, therefore, the insignificant overlap in the production and/or sale of non-selective herbicides in India does not remain.  The Commission has to look into the veracity of the said claim and verify the documents to substantiate the said claim.  The Commission shall also examine the share components of the BASF to ascertain the true nature of the Agreement said to have been executed by Bayer to BASF.  Moreover it is only in the stage of Agreement and pending finalization of the said Agreement between Bayer and BASF, the combination of the Parties should not be APPROVED by the Hon’ble Commission.

MONSANTO AND MAHYCO – ABUSE OF DOMINANT POSITION

It is an admitted fact that the Monsanto indirectly holds a shareholding of 26% in Maharashtra Hybrids Seeds Company Limited (Mahyco). The fact that the Monsanto is holding 26% shares in Mahyco, which again has its presence in the various product segments in which the parties are now having market share need to be taken into consideration by the Commission as the same would have direct impact and give rise to appreciable adverse effect on competition (AAEC).  From the products Segments listed by the Parties, Mahyco has its markets share in the following Products;

Agricultural Seeds: Cotton, Rice, Millet

Vegetable Seeds: Cabbage, Cauliflower, Cucumber, Bitter Gourd, Bottle Gourd, Okra, Hot Pepper, Sweet Pepper, Water Melon.

This clearly establishes high concentration of market and a position of strength as defined under ‘Explanation’ to Section 4 of the Competition Act, 2002, hereinafter referred to as Act.  The dominant position in Agriculture Seeds and Vegetable Seeds Segment by the parties to the combination along with MAHYCO  would result in Abuse of Dominant Position and not only likely cause but certainly cause AAEC.

Cotton

The proposal of the Monsanto to sell its branded cotton business to Tierra Agrotech Private Ltd is only with regard to downstream market.  The said sale is not yet finalized and though it is stated that it was done for reasons unrelated to the Proposed Combination, the same needs further enquiry.  The overlap between the parties said to have been eliminated in the downstream may be stage managed and needs proper enquiry and appropriate investigation.  Moreover Monsanto has 100% concentration of the market in the upstream market and Bayer has 0-5% market share in the downstream market.  All these would lead to ‘Dominant Position’ by the Parties to the Combination.  This would result in limiting or restricting  the production of goods or provisions of services or market thereof and the technical or scientific development relating to goods or services to the prejudice of consumers prohibited under Section 4 (2) (b) of the Act. This would result in AAEC and therefore the agreement should be declared as void.

Vegetable Seeds

The monopoly of the combination of the Parties in the vegetable seeds sector is highly detrimental to the market and brings down the competition and choices for the consumers.  The total monopoly in Onion and almost near monopoly in Tomato, watermelon, melon is not only detrimental to the farmers but also for the nation as such.  The Combination of the Parties engaged in identical or similar trade of goods or provisions of services, would result in determining the prices both directly and indirectly and would also result in limiting or controlling the production, supply, markets, technical development, investment or provisions of services.  This is termed as Anti Competitive agreement under Section 3 (3) of the Act.  If this combination is allowed the entire nation would have an appreciable adverse effect on competition (AAEC).  The Commission shall therefore requested to not to allow this Combination as it would have disastrous impact in the market, for the farmers as well as consumers.

SEEDS TREATMENT SEGMENT

The seeds treatment segment also has a monopoly of the Combination Parties both in Cotton and Corn and this would likely to cause AAEC.

We the farmers of this country see the threat the farmers community face due to the combination of the parties namely Monsanto and Bayer as it would result in Abuse of Dominant Position.  We request the Commission to conduct appropriate enquiry and investigation into the agreement between Bayer and Monsanto which will clearly establish the dominant position of this Combination in the market and thereby will bring down competition in the products, prizes, quality and participation.  This would lead to total dependency of the farmers of this county on this combination and trap the farmers in untold misery.  Given the innumerable farmers suicide across the country due to the total monopoly of Cotton market by Monsanto in the past, the Commission need to prevent this Combination and protect the farmers of this country by not falling into the trap set by this combination.

MONSANTO AND TIERRA AGROTECH PRIVATE LTD

We also want the Commission to enquire that the so called sale of Monsanto’s branded cotton business to Tierra Agrotech Private Ltd and

Post the notification of this Proposed Combination with the Hon’ble Commission, Bayer has executed a definitive agreement with BASF dated 13 October 2017 to divest the following businesses:

Bayer’s worldwide glufosinate ammonium business;

Bayer’s Liberty Link technology which confers trait plants with a resistance to the non-selective herbicide glufosinate ammonium, including the related intellectual property licensing business worldwide.

Virtually the entire business of Bayer’s agricultural seeds and traits worldwide (including all of its transgenic events and traits in cotton, corn, oilseed rape, canola and soybean) is being sold to BASF. The very limited agricultural seeds and traits activities that are not part of the agreement with BASF include Bayer’s small Indian cotton seeds business.  The Commission shall investigate the true object behind these transactions, as it may be due to the legal impediments faced by this combination and to circumvent the said impediments.

Best regards,

Yudhvir Singh General Secretary, ICCFM Bhartiya Kisan Union, Delhi RakeshTikait, Bhartiya Kisan Union U.P KS Puttanaiah Karnataka Rajya Raitha Sangha, Karnataka ChamarasaPatil Karnataka Rajya Raitha Sangha, Karnataka Rajvir Singh BKU, NCR

K. M. Rajegowda, Karnataka Rajya Raitha Sangha, Karnataka P Raveendranath, Kerala Coconut Farmers Association , Kerala S Kannaiyan South Indian Coordination Committee of Farmers Movements Ajmer Singh Lakhowal, State President, BKU Punjab K T Gangadhar KarnatakaRajyaRaithaSangha, Karnataka

ChukkiNanjundaswamy, Karnataka Rajya Raitha Sangha, Karnataka SellaMutthu, President, Tamil Nadu Farmers Association, Tamil Nadu Nallagounder, Uzhavar Ulaippalar Katchi, Tamil Nadu Farmers Association Ratan Singh Mann BKU President , Haryana Ms. Rajareega President, Women Wing Tamil Nadu Farmers Association