Competition & Regulation

New CFA Report Warns of Unprecedented Impact on Free Markets from Proposed Bayer-Monsanto Merger

Proposed Deal Would Raise Prices, Stymie Innovation, and Squeeze Farmers

Washington, D.C. — A new report on the examining the proposed mega-merger between the agrochemical giants Bayer and Monsanto, the Consumer Federation of America (CFA) points out that the companies operate in a “highly concentrated, vertically integrated tight oligopoly on steroids” and “the merger would dramatically increase the incentive and ability to raise prices and manipulate research and development to the detriment of farmers and consumers.”

“This merger violates the Horizontal Merger Guideline by more than any merger ever proposed in the 50-years since the Department of Justice issued the Guidelines,” Dr. Mark Cooper, a Senior Fellow at CFA and author of the report said.  “The Department of Justice must block this deal, or it will be overwhelmed by a tsunami of grossly anticompetitive, anti-consumer merger proposals.”

Bayer and Monsanto have argued that the economic efficiencies resulting from the vertical integration of traits, seeds and agrochemicals would offset the harms to competition that this merger poses. However, the CFA analysis, entitled Mega-Mergers in the U.S. Seed and Agrochemical: The Political Economy of a Tight Oligopoly on Steroid and the Squeeze on Farmers and Consumers, shows that the immense increase in vertical leverage, and the ability to coordinate behaviors across crops, would magnify the market power of the small number of firms that dominate the global field crop sector, raising even more concerns.

“The bundling of traits, seeds and chemicals, backed up with onerous contractual conditions, locks consumers in and competitors out,” Cooper added. “The seed/agrochemical giants manipulate patent thickets and extensions to maintain their control and write contracts that extend it beyond the patent expiration.”

“The only answer to this merger that makes economic sense is a loud and clear NO!,” Cooper concluded. “While many anticompetitive problems will remain, a denial of the merger will prevent them from getting much worse and should signal the beginning of a broader effort to address the underlying economic issues and break the political stranglehold that these firms have on the policymaking process.”

Contact: Mark Cooper, 301-384-2204

The Consumer Federation of America is an association of more than 250 non-profit consumer and cooperative groups that was founded in 1968 to advance the consumer interest through research, advocacy, and education.