The EU Commission has opened an in-depth investigation to assess the proposed $66bn merger between Monsanto and Bayer, over concerns that Bayer’s buyout of the Missouri-based agchem company would reduce competition in the markets for pesticides, seeds and traits.

The probe was announced on Tuesday, by Competition Commissioner Margrethe Vestager, who said, “Seeds and pesticide products are essential for farmers and ultimately consumers. We need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices. And at the same time maintain an environment where companies can innovate and invest in improved products.”

The proposed merger, which would create the largest agribusiness in the world, has been widely opposed in Germany, where Bayer is based. German environment group Bund last month called on competition authorities in the US and EU to intervene, citing the impacts consolidation in global agribusiness, including Syngenta’s acquisition by ChemChina and a merger between DuPont and Dow, will have on the farm industry. The green group warned that the Bayer-Monsanto merger would give the new agribusiness behemoth a stranglehold over products, prices and quality, allowing it to have inordinate influence on agricultural production and food safety, which they worry would impact on farmers and accelerate a loss of biodiversity.

Bund spokesperson Heike Moldenhauer said of the three planned mergers, “All three corporations are sticking to an agricultural model that focuses on perpetual productivity increases, the management of increasingly large areas, monocultures and the large use of pesticides and GM plants.”

Having been officially notified of the planned merger on 30th June, the Commission has until 8th January to make a decision on the takeover. On 31st July 2017, Bayer and Monsanto both submitted commitments to address some of the Commission's initial concerns. However, the Commission considered Bayer’s promised divestments “insufficient to clearly dismiss its serious doubts as to the transaction's compatibility with the EU Merger Regulation.”

Bayer has already pledged to sell its glufosinate herbicide (sold as Liberty), alongside oilseed rape and cotton seeds engineered to resist applications of the chemical.

Responding to news of the probe, Bayer said, “The company had expected further review of the proposed acquisition of Monsanto due to the size and scope of the transaction,” and restated that it is confident of a deal being approved by the end of the year.

In its announcement, the Commission highlighted the shift towards global concentration in the agribusiness world, highlighting its own intervention in the Syngenta-ChemChina merger, which it passed, along with the Dow-DuPont merger, after securing certain concessions including the sale of much of ChemChina’s pesticide subsidiary Adama. The EU Executive also mentioned the scale of opposition from individuals and civil society groups in Europe, who have made contact to oppose the planned merger.

Concerns highlighted by the Commission on Tuesday include:

• Bayer produces glufosinate ammonium, one of the only alternatives to Monsanto’s off-patent herbicide glyphosate (Roundup).
• An earlier Commission investigation indicated that Monsanto and Bayer are two of a limited number of competitors capable of discovering new active ingredients for herbicides and developing new formulations (which officials noted might slow the development of new products to tackle growing weed resistance to existing products).
• Commission officials also noted a potential overlap in the two companies’ products that tackle varroa mites in bee colonies
• The companies have a high combined market share for vegetable seeds, with some products directly competing with one another
• Bayer and Monsanto together have a huge market share in oilseed rape seeds, at the European and global levels (Monsanto is the market leader in Europe, and Bayer is one of its few serious competitors in this field)
• Both companies are important licensors of cotton seeds to their competitors in Europe, and both are investing in research and innovation programs for wheat.
• Bayer is also one of Monsanto’s few competitors in the market for certain traits, including patented herbicide tolerance in some crops on the market.

The Commission also promised to look into Bayer and Monsanto’s plans for ‘digital farming’ (packages of seeds and pesticides, along with sensors, software and new technology for precision farming), to investigate whether competitors of the post-merger company would be muscled out by these bundles.

The Commission said it is cooperating with competition authorities in the US, Brazil, Australia, Canada and South Africa, where Bayer and Monsanto operate.