Picture: REUTERS
Picture: REUTERS

The Competition Tribunal has approved a merger between Bayer and Monsanto, subject to conditions.

An intermediate merger was originally approved subject to conditions by the Competition Commission on May 3 2017. The merger is part of the global transaction between Bayer and Monsanto, which has been notified in other jurisdictions such as the US, Russia, China and Brazil.

Bayer is active in the crop protection business in SA selling fungicides, insecticides, herbicides and seed treatment products, among others. Monsanto is active in the supply of seeds, biotechnology traits and herbicides in SA.

"The conditions require the merged entity to divest and sell the entire global Liberty Link trait technology and the associated Liberty branded agro-chemicals business of Bayer, as well as Bayer’s South African cotton seed business," the tribunal said on Friday.

The conditions address competition concerns identified by the commission in the market for the supply of genetically modified (GM) cotton seeds as it creates a monopoly in SA.

"The proposed merger also results in the removal of potential competition as it removes the opportunity for Bayer to independently enter into SA and compete against Monsanto, particularly in the development and production of traits for seeds and the accompanying herbicides used in a number of agricultural markets," the tribunal said.

"There are also several structural factors in this seed industry that are conducive for co-ordinated conduct, which would be enhanced by the proposed merger through the prevalence of cross licensing agreements."

The tribunal also said the potential buyer of the divested businesses would be required to commercialise the divested products in SA, or alternatively, oblige the potential purchaser to licence the divested business to a South African third party to commercialise should the purchaser be unable to do so.

In terms of the agreement, a trustee will be appointed to oversee the divestiture, which will be to an independent third party. Divestiture will include distribution rights and other intellectual property rights owned or licensed to Bayer in SA. This is to ensure the development, production and sale of cotton in SA.

Meanwhile, the Association of Electric Cable Manufacturers SA (AECMSA) has admitted to directly or indirectly fixing the selling price of power cables, according to the Competition Tribunal.

Customers affected by the contravention include Eskom, as well as large industry and municipalities. The penalty issued is 1% of AECMSA’s membership fees for 2010. This amounts to of R14,853.

But the tribunal added: "AECMSA’s decision to settle the complaint referral does not amount to a settlement or an acknowledgement of any contravention of any member of AECMSA. Members will decide independently whether to admit or deny the contraventions and whether or not they wish to settle with the commission."

The tribunal said AECMSA admitted that setting the indices by way of agreement by AECMSA directly or indirectly fixed the selling price of power cables.

The prices or costs of raw materials reflected in the indices included copper, lead, aluminium, steel tape, polyethylene, fully galvanised wire, PVC cable compound, rubber, neoprene and silicone.