What Indian regulator ruled in Bayer’s Monsanto deal?

Bayer is a German stock corporation with competencies in the areas of healthcare and agriculture while Monsanto is a global supplier of agricultural products like seeds, biotechnology traits, and herbicides

What Indian regulator ruled in Bayer’s Monsanto deal?

The Indian regulator, Competition Commission of India (CCI) has approved the US$ 66 billion acquisition of Monsanto Company by Bayer AG under Section 31(7) of the Competition Act, 2002, the Ministry of Corporate Affairs, Government of India has announced in a statement on Wednesday.

Bayer, the acquirer, is a German stock corporation and is a life sciences company with competencies in the areas of healthcare and agriculture. The activities of Bayer are carried out in three main divisions viz. pharmaceuticals, consumer health, and crop sciences. Monsanto is a global supplier of agricultural products like seeds, biotechnology traits, and herbicides.

On August, 7, 2017, the Competition Commission of India had received a notice from Bayer in relation to its proposed acquisition of Monsanto. In terms of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, earlier in September 2017, the German giant had made a public announcement of the deal of acquisition.

Based on its investigation, the Commission was of the opinion that the proposed combination is likely to have an appreciable adverse effect on competition in some markets in India but the same could be addressed by way of modifications to the proposed combination.

According to the CCI ruling, divestment of the Glufosinate ammonium (a non-selective herbicide), crop traits of cotton and corn, and hybrid seeds of vegetables businesses of Bayer to an independent entity will happen, which meets the parameters prescribed in the order of the Commission. Divestment of the shareholding of Monsanto in Maharashtra Hybrid Seed Company (26 percent) will be made to an independent entity.

The resultant entity of the combination would follow a policy of broad based, non-exclusive licensing of Genetically Modified (GM) as well as non-GM traits currently commercialised in India or to be introduced in India in the future, on a fair, reasonable and non-discriminatory terms (FRAND Terms), CCI has ruled in its statement.

The combined entity would follow a policy of non-exclusive licensing of non-selective herbicides and / or their active ingredients in case of launch of new GM / non-GM traits in India that restrict agricultural producers including farmers to use specific non-selective herbicides being supplied only by the parties, on a fair, reasonable and non-discriminatory basis, the Commission has stated.

According to the Commission, the combined entity would allow Indian users / potential licensees to access the following on FRAND Terms: (a) existing Indian agro-climatic data owned and used by the combined entity for its digital applications commercialised in India; (b) commercialised digital farming platforms of the combined entity for supplying/ selling agricultural inputs to agricultural producers in India; and (c) digital farming applications of the combined entity, commercialised in India, on subscription basis. This remedy shall operate for a period of seven years from the commencement of commercialisation of digital farming products or digital farming platforms, subject to a total period of 10 years from the closing of the combination.

The combined entity would also grant access to Indian agro-climatic data, free of charge to Government of India and its institutions, to be used exclusively for creating a public good in India. The combined entity is barred from offering its clients, farmers, distribution channels and/or its commercial partners, two or more products as bundle which may potentially have the effect of exclusion of any competitor. The combined entity is further barred from imposing, directly or indirectly, commercial dealings capable of causing exclusivity in the sales channel for supply of agricultural products, The regulator has ruled.

The Commission further ensured in its order, that in case the combined entity offers better commercial terms to a new licensee for any of the above licenses, then it would be bound to offer, within 60 days, such similar terms to all existing licensees.

Bayer has also been directed by the regulator to disclose, on its Indian websites, all contact details to facilitate the implementation of remedies ordered by the Commission.

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