After concluding its in-depth review into the biggest chemical industry mega merger still open, the European Commission has approved Bayer’s plans to take over Monsanto, provided the German group carries through with the authority’s mandated extensive remedy package worth in total more than €6 billion in annual sales of seeds, pesticides seeds, pesticide and assets in digital agriculture.

In a statement, Bayer CEO Werner Baumann said, “receipt of the European Commission’s approval is a major success and a significant milestone." Bayer has now received approvals for the transaction from well over half of the world’s 30 regulatory authorities, including those in Brazil and China, he noted.

Crucial US approval is still outstanding, however, Recent reports suggested that competition authorities there could mandate additional divestments, though these are likely to be minor and locally focused following the EU’s broad sweep.

In a statement announcing the decision, EU Competition Commissioner Margrethe Vestager said the remedies proposed to date “meet our competition concerns in full.” This, she said, “ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets.”

In particular, Vestager said, “we have made sure that the number of global players actively competing in these markets stays the same.”  She said the Bayer-Monsanto decision took into account the market situation following the merger of Dow and DuPont and the takeover of Syngenta by ChemChina. In both cases, the respective remedies were taken into account.

The merger of the two industry giants will create the world’s largest integrated seed and crop protectants producer. Monsanto is currently the world's largest seeds producer, with most of its business concentrated in the Americas. The US group is also the global heavyweight in production of the controversial herbicide chemical glyphosate.

Bayer is the second largest supplier of pesticides worldwide, with a stronger focus in Europe. It is also an important globally active seeds supplier for a number of crops. The German player recently agreed to sell a package of assets worth €5.2 billion to compatriot BASF. Additionally, it has proposed the Ludwigshafen group as buyer of an additional asset package.

The EU stressed that its approval of the merger is conditional on a review of BASF’s portfolio from a competition perspective, due to be concluded by Apr. 16.  Observers, however, do not expect the European authority to have concerns here, as the world’s largest chemical producer does not have any significant position in the seeds market.

Altogether, the mandated divestments cover Bayer's global R&D organization for seeds and traits as well as its research activities to develop a challenger product to Monsanto's glyphosate – the latter should be interesting from an industry perspective, especially in view of the still not definitively resolved European debate over the herbicide chemical.

The divestments also cover certain Monsanto assets that in future would have competed with a Bayer seed treatment against nematode worms. Bayer has additionally committed to grant a license – according to reports, this is part of the BASF deal – for its entire global digital agriculture product portfolio and pipeline products.

European environmental advocacy as well as farmers’ groups had petitioned the Commission not to allow the merger. In a poll conducted by Friends of the Earth Europe, 54% of respondents favored blocking it. But the Commission said that “while these concerns are of great importance, they cannot form the basis of a merger assessment.”