CCI gives Bayer acquisition of Monsanto green light

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The Competition Commission of India (CCI) required Bayer and Monsanto to carry out a combination of structural and behavioural remedies before giving its approval for the merger, according to a legal adviser who worked on the deal.

“The structural remedies involved Bayer divesting its global glufosinate ammonium business along with its seeds business, while Monsanto agreed to divest its 26% stake, along with certain rights, in the Maharashtra Hybrid Seeds Company,” said Naval Chopra, a partner at Shardul Amarchand Mangaldas & Co (SAM), which advised Monsanto.

“With regards to behavioural remedies, CCI required the Bayer-Monsanto combined entity, after the transaction, to commit for a specified timeframe: (1) the licensing of genetically modified (GM) and non-GM traits on fair, reasonable and non-discriminatory (FRAND) terms; (2) provide FRAND access to its current digital agriculture products; (3) ensure non-exclusive distribution channels; and (4) not bundle products that can cause an appreciable adverse effect on competition in India,” Chopra told India Business Law Journal.

The CCI carried out a detailed phase II review on the combination before approving Bayer’s US$63 billion global acquisition of Monsanto. It conducted a comprehensive competitive assessment of various segments vegetable seeds, broad acre seeds, crop protection products, traits licences and digital agriculture solutions offered by the parties. Both parties are present in the segment of production and sale of non-selective herbicides, cotton and vegetable seeds in India.

“The CCI not only considered horizontal overlaps and vertical relationships, as in usual course, but also examined the ‘portfolio effects’ that the parties would enjoy as a result of the transaction,” added Chopra. Portfolio effects are the advantages that a company gains in the market from the expansion of its product range as a result of a merger.

Both parties are listed on the Bombay Stock Exchange and National Stock Exchange. The new company will be called Bayer. The transaction required antitrust approval from competition authorities in several jurisdictions including the EU, US, Brazil, China, Russia and South Africa.

SAM’s competition law team provided strategic advice to Monsanto and assisted Bayer in filing the form II notification with the CCI and responding to information requests. The firm supported Monsanto in addressing concerns of the CCI.

Partners Chopra and Aparna Mehra led SAM’s competition law practice team. They were supported by principal consultant Rohan Arora, senior economist Saattvic, senior associates Aman Sethi and Nitika Dwivedi.

Luthra & Luthra’s competition team advised Bayer. The team comprised partners GR Bhatia, Abdullah Hussain and Kanika Chaudhary Nayar, managing associate Rudresh Singh, and senior associate Divye Sharma. The firm was the India counsel to Bayer and had also advised the company in 2017 on its acquisition of Monsanto.

Arnold & Porter was international counsel to Monsanto, while Sullivan & Cromwell was international counsel for Bayer. The plan of merger was entered into by the parties in September 2016.