To: January 17th, 2018
Competition Commission of India,
18-20, 7th Floor, Hindustan Times House,
Kasturba Gandhi Marg,
New Delhi 110001
Sub: Our objection to the proposed combination between Bayer AG and Monsanto Company – please disallow it – reg.
Greetings! We introduce ourselves as representatives of various organisations that work with farmers (farmer unions as well as farmers’ collectives), as well as citizens of India who have been doing our best to support sovereign and sustainable farm livelihoods.
We recognize, and are aware that big agri-business corporations use all the means at their disposal, whether it be IPR laws or technologies like hybrid and Genetic Use Restriction Technology (GURT) or market maneuvers like the proposed combination between Bayer and Monsanto, to ensure exclusive monopolistic markets. In their pursuit to do so, they will not hesitate to sue farmers or governments or other corporations in the national seed industry, as has been experienced in India as well as elsewhere. This has a direct bearing on the livelihoods of millions of our citizens, who are already teetering between life and death as the number of farm suicides in the country shows.
At the outset, we believe that the 15 day notice provided by the Commission for public participation in its inquiry process as per Section 20 of the Competition Act 2002, is too short for meaningful public participation, and therefore, urge you to extend the deadline provided.
Anti-people activities of these corporations:
It is not out of place to point out that both Bayer and Monsanto have long ignominious histories of anti-people activities. Monsanto, for instance, is known to have sued, fined and jailed farmers in countries of North America in the name of patent infringement.
CCI’s past findings on Monsanto:
CCI is already familiar with the practices adopted by corporations like Monsanto when it studied the subject of Bt cotton and royalty/licensing fees charges in the country, in 2006-07 as MRTPC (Monopolies and Restrictive Trade Practices Commission) with its interim order of 11/5/2006, and in the recent past as CCI, when the DG was asked to investigate further, after the Commission held that the conduct of Mahyco Monsanto Biotech Limited prima facie appears to be in violation of Section 4 of the Competition Act 2002. (http://www.cci.gov.in/sites/default/files/Ref%20Case%20022015%20%26%20others.pdf/ http://www.cci.gov.in/sites/default/files/Ref%2002-2015%20and%20107-2015%20-26%281%29%20order_10.02.2015.pdf).
CCI should look at the cumulative picture:
The 3 mega-combinations in the agri-business sector including that of Dow and DuPont and ChemChina’s merger with Syngenta, in addition to Bayer’s acquisition of Monsanto, are going to result in a concentration of 60% of global market of proprietary seeds and agri-chemicals in the hands of 3 entities, which is effectively buying up competition.
Like in the case of Environment Impact Assessment where cumulative impact is assessed, the Competition Commission of India also should assess this case in the context of two other mega mergers/combinations and thereby, the cumulative adverse effect on competition.
BAYER’S & MONSANTO’S CURRENT POSITIONS:
Bayer and Monsanto are already the biggest players in the agro-chemical and seed technology markets. The point to be noted is that there could be a chain of linked products brought in, like herbicide tolerant GMOs, for instance, where along with seeds, an associated proprietary herbicide is also marketed by the same entity. This needs to be explored too, with additional information sought on GMO products in the pipeline for these companies.
CCI would be familiar with a new study released by University College, London (UCL) on World Food Day (October 16 2017) which concluded that a Combination between Bayer and Monsanto would reduce competition. The research gave five main reasons why this would happen: (a) High market concentration (just 3 corporations would own and sell about 64% of the world’s pesticides/herbicides and 60% of the world’s patented seeds); (b) Entrenched market power (a large number of patents being held by Bayer and Monsanto); (c) Increased prices (due to collusive pricing between small set of market players) and reduced choices for farmers; (d) Locking farmers in (how farmers would be locked into a value chain of products including digital farming and other IT platforms) and (e) reduced competition and innovation. The study delineates how these mega-consolidation between major players will make farmers dependent and vulnerable to price hikes (which is indeed a reality world-over and in India too). The study clearly shows that asset selling or divestiture will not resolve the problem of competition diminishing, given the intense concentration of the markets related to seed, pesticides (insecticides, herbicides, seed treatment chemicals, fungicides etc., included) and GM-trait-selling.
CCI would also be aware of the latest developments with regard to European Commission’s investigations into the proposed combination where formal objections were filed by the European Commissioner for Competition, after very detailed investigations last year.
Why this Bayer Monsanto Combination is a matter of great concern:
The concern is with regard to (exorbitant) prices as well as (lack of) choices for farmers both in terms of seeds and pesticides. With competition effectively wiped out, farmers who do not have their own seeds saved will be dependent on these corporations and their cost of cultivation is likely to shoot up. This then has implications for indebtedness as well as farm suicides associated with increased debt burden due to increasing cost of cultivation, not supported by (unremunerative) markets.
The lack of choices will also have serious environmental ramifications for the country, with monocropping being the result of such a situation of lack of competition. Lack of choices for farmers will also mean lack of choices for consumers. Increased cost of cultivation for farmers could also translate into increased food prices for consumers.
It is also apparent that the lobbying power of these mega-corporations will be such that farmers’ interests are not likely to prevail when it comes to individual instances of serious losses or violations with regard to anti-competition rules. State governments in particular, who bear the brunt of such losses incurred by farmers, are neither empowered nor made responsible in any such scenario, even though Agriculture is a State subject as per the Constitution of India. This is of course unfair and unconstitutional.
SPECIFIC ISSUES OF CONCERN, ARISING FROM FORM IV SUBMISSION BY BAYER:
- At several locations, Bayer justifies this combination and tries to assure the regulator that competition will not be adversely affected, by citing its divestment deals related to Glufosinate Ammonium (herbicides) and certain transgenic technology traits, with BASF. It is apparent that the CCI should be able to study all the details of such an agreement between BASF and Bayer before it can take a call on implications for this Bayer Monsanto combination too. It is also apparent that the Competition Commission has to run a similar process for public consultation, before taking a final view on the BASF-Bayer agreement implications.
Needless to say, the same applies for Monsanto’s sale of its cotton seed business to Tierra Agrotech Private Limited.
- As mentioned already, this combination’s potential adverse effect on competition has to be assessed in cumulative fashion, by studying this along with other (mega) combinations taking place.
- Form IV clearly shows that these two entities certainly have a significant overlap in the vegetable seeds market and the subsequent explanations in Section VIII of Form IV notwithstanding, this would have a significant adverse impact on competition, and thereby choices for farmers, affordability of products, and their profitability (livelihoods).
- Form IV does not provide all details required to make a comprehensive assessment about potential adverse effect on competition. For instance, CCI has to also consider parameters other than current market shares for different crop segments, like patents and any data exclusivity held by these two entities and their combined entity. Unless this is done specifically for those proprietary products which are giving them the largest market segments, nothing significant can be concluded from the submission made by these companies on effect on “nature and extent of innovation”.
- In certain markets like transgenic technological traits, it is important to study what is in the regulatory pipeline with India’s Genetic Engineering Appraisal Committee (GEAC) and Review Committee on Genetic Manipulation (RCGM), since the advantage in that market segment comes from IPRs as well as being the first-one-in to fulfill biosafety requirements. In that sense, it is not just about products already in the market, but in the regulatory pipeline.
- It is also noted that the current market shares do not clearly specific if the percentage cited is in terms of volumes or value. This information might be important to decipher actual competition in the market. CCI has to ask details of the same.
- While parties such as Bayer submit information to the Competition Commission as though there is a wide choice available to consumers (who are farmers in this case) between competing products, it is apparent that MNCs have more attractive “junkets” and other aggressive marketing to offer to their distributors and retailers when it comes to promotion of sales of their products. These include trips to more exotic destinations, compared to what other companies have to offer. This also has a bearing on choices and competition.
- Market for Non Selective Herbicides in India: It is noted that data in Form IV pertains to 2015, whereas there has been a significant jump in the recent past in use of non-selective herbicides, aided by a large scale increase in illegal herbicide tolerant GM cotton, accompanied by large scale use of corresponding herbicide, once again in an unapproved/illegal fashion. This is a case for investigation for CCI, with or without the proposed combination. Therefore, the reporting of Monsanto’s market share of 20-25% in this segment has to be re-looked at.
- Market for licensing of traits and technology in Cotton (upstream market): CCI has already investigated twice into Monsanto’s (transgenic) traits and technology business in cotton and found it indulging in anti-competition behaviour. As Bayer acknowledges rightly in its Form IV submission to CCI, the proposed combination “merely leads to change of control from Monsanto to Bayer regarding Monsanto’s Bollgard II technology”! It is widely reported that it was the MNC seed lobby that stopped the Government of India’s notification with regard to regulation of licensing agreements, and therefore, it is incorrect for Bayer to say that the regulation significantly limits the commercial freedom of any owner of Bollgard II technology (the proposed regulation itself has been stymied successfully).
10. Downstream Market for Sale of Cotton Seeds: In terms of the downstream market of sale of cotton seeds, Bayer’s 0-5% has to be read along with Mahyco’s 0-5%, given the equity holding of Monsanto in Mahyco. Also, given the adverse developments with many licensees with regard to the downstream market for the production and sale of GM cotton seeds, the market share in this segment could increase substantially for Bayer now. It is not out of place to draw the attention of the CCI to a recent letter written by an Indian seed companies’ association with regard to this matter: https://nsai.co.in/editor/fmanage/userfiles/Circular_2_/NSAI169.pdf
11. Downstream Market for sale of rice seeds: Data pertains to 2015 and not the latest year (2017). Further, in assessing any AAEC here, Mahyco’s share in the market should also be considered. With or without the combination proposal, it is worthwhile for the CCI to investigate into the huge share of 40-45% in the rice hybrid seeds segment for Bayer and implications for competition.
12. Downstream Market for Corn Seeds: As already pointed out, CCI has to look at Monsanto’s edge with regard to upstream market for corn transgenic traits/technology given that its products are in an advanced stage in the regulatory pipeline with GEAC.
Further, at the downstream market end, Monsanto’s 15-20% has to be read along with Mahyco’s 0-5%. Combined with DowDuPont’s 20-25%, this is indeed a limited market for farmers. We once again point out that the CCI has to take up a cumulative assessment, and not case by case. Meanwhile, more and more farmers are being shifted to hybrid corn cultivation by large scale devious programmes initiated by big Monsanto (like Project SunShine, Project Golden Rays etc.) through state government departments, forcing farmers to become dependent on external seed sources by luring them into hybrid corn cultivation through freebies in the initial years. Most of these programmes are being taken up in adivasi/tribal pockets where livelihoods are precarious, to say the least. Our fact finding reports on these programmes are present here: https://kisanswaraj.in/category/reports/. This major expansion of hybrid corn cultivation (induced by mainly Monsanto based on inexplicable, unscientific reasons), in the context of these mega-mergers will induce great riskiness in the livelihoods of the most vulnerable farmers in the country.
13. Licensing of Herbicide Tolerant Trait/Technologies: The Form IV submission by Bayer is not revealing about the advanced stage (in fact, in the penultimate stage and could come up for approval any time now) of HT GM seeds in corn that Monsanto has, in the regulatory pipeline with GEAC.
14. Market for Vegetable Seeds: In both the tables of (40) and (42), one for both OPV and hybrids combined and the latter for just hybrid seeds in vegetables, it is clear that there is already a monopoly for either Bayer or Monsanto (for example, in Cabbage, Cauliflower, Bitter Gourd, Okra, Hot Pepper, Tomato, Watermelon etc.) and the combined share is significantly higher than the nearest competitors. Further, for each vegetable, the share of Mahyco also has to be considered.
It is also apparent that there is going to be significant AAEC in the hybrid seed market in vegetables, given the already large shares of both these companies Bayer and Monsanto in this market.
Reasoning proffered by Bayer in (49) to (63) does not hold good given the substantial existing market segments that these companies have. For instance, what is listed in Point 62 as an advantage for the country’s food resources’ prospects, is also a reason (combined R&D and distribution efforts of these Parties) why competition will be adversely affected.
15. Seeds treatment products: The dominance of Bayer is apparent, across different crops like Paddy, Cotton and Corn, and this needs to be investigated by the CCI for itself, with or without the proposed combination.
16. We find that the following statements made in Form IV are false and questionable:
- Open pollinated and hybrid seeds may be interchangeably used by farmers and are substitutable products – this is an outright unscientific statement to make.
- As there are a large number of varieties available in the market, farmers weigh their options before buying seeds that they need – academic studies are showing that farmers are undergoing processes of de-skilling, and seed decisions are now becoming irrational and are almost fads.
- Farmers take advantage of the immense array of choices not only in terms of source of supply but also on the type of product they wish to use on their land – as pointed out above, environmental learning of farmers is reported to be declining, with increase in social learning, including being influenced by aggressive marketing tactics of corporations.
- Use of better yielding seeds will increase productivity of farm lands, which will increase incomes of farmers, who constitute more than 65 per cent of the Indian population, and which will spur economic development in India: from the agrarian distress that is manifest all over the country, and from official data, it is not clear how incomes of farmers have increased, when a large majority of farmers still have negative net returns (NSSO 70th Round).
There is prima facie evidence, from the Parties’ own submission of Form IV, of monopoly-like situation of either of these two corporations existing already in several market segments, even before the proposed acquisition, and there is a distinct picture of such a monopoly emerging after the combination, for different kinds of products.
It is apparent that this mega merger will have its impacts on India’s farmers, that too some of the most vulnerable marginal/smallholders or adivasis etc (cotton, maize and vegetable farmers). At a time when India’s farmers are already reeling under a severe agrarian distress, anything that limits their choices, or makes their enterprise more risky should be regulated strictly and prevented.
It is also apparent from the way the Form IV has been designed, based entirely on which, there is a danger of CCI coming to wrong assessments of potential AAEC. We would like to repeat that the following additional information should also inform the CCI’s regulatory processes:
- Products in the regulatory pipeline, especially with GEAC and RCGM which tend to give a market edge to certain parties, for having fulfilled the biosafety requirements in the transgenic regulatory regime;
- IPRs held by these companies on different products, giving them a market edge;
- Full details of the October 13th 2017 definitive agreement of Bayer with BASF, and the implications for AAEC from the same, along with the similar deal that Monsanto has with al with Tierra Agrotech Private Limited – the CCI has to run public consultations on these combinations and agreements in a manner similar to the current one;
- Mahyco’s market share for various products, given that Monsanto has a 26% shareholding in Mahyco;
- Cumulative effect of all three mega combinations in the seed and agri-chemical industry.
The Directive Principles of State Policy require the State [Article 39(c)] to ensure that the operation of the economic system does not result in the concentration of wealth and the means of production to the common detriment. This combination would essentially result in such concentration, and common detriment. From all evidence that already exists, this is a serious threat to competition, and thereby, farm livelihoods (in addition to several indirect impacts on other citizens and environment). These mega-combinations should be stopped and the CCI is urged strongly to do so. We write to you to urge you to firmly disallow the acquisition of Monsanto by Bayer AG.
Further details about this submission, as laid down by CCI:
(a) Name, address and contact details of the person(s) writing to the Commission:
Rajesh Krishnan, Farmer, Vayalorathu house, T.P 14/71-b, Kulirmavu, thrissilery, P.O Manathavady, 670646 Wayanad, Kerala.
Phone number- 7559915032, 9845650032
(b)How such a person(s) is adversely affected or is likely to be affected by the combination, keeping in view the relevant provisions of the Act/factors provided under sub-section (4) of Section 20 of the Act:
The party submitting this document is making the submission on behalf of farmers of the country who are likely to be affected by the combination. It is apparent that this combination would result in the parties to the combination being able to significantly and sustainably increase prices and given the high likelihood that the combination would result in the removal of a vigorous and effective competition in the market. It is seen prima facie that the parties, even without the combination, have indulged in abuse of dominant position. We urge the Commission to inquire into this too.
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- Ajay Etikala- Concerned Indian Citizen, Delhi
- Anand, Swati, Michael and Rohit, Paryavaran Suraksha Samiti, Vadodara
- Ananthasayanan, Safe Food Alliance, Chennai
- Aruna Rodrigues, Sunray Harvesters, MP
- Babubhai Patel, Secretary, Bharatiya Kisan Sangh, Gujarat
- Badribhai Joshi, Shantigram Nirman Mandal, Tanachha, Dist. Bharuch
- Balaji Shankar, Tharchaarbu Iyakkam, Tamil Nadu
- Balkrishna Namdeo, Bhopal Gas Peedit Nirashrit Pensionbhogee Sangharsh Morcha
10. Bharat Mansata, Vanvadi Agro-ecological Regeneration Association (VARA), Maharashtra
11. Bharatbhai and Krishnakantbhai, Bhavanagar Sajiv Kheti Manch
12. Bimal Prasad, Odisha Soochana Adhikar Abhiyan, Bhubaneswar, Odisha
13. D. V. Sreedhar, Goodnews India Foundation
14. Devesh Patel and other Farmers, Madhya Gujarat Sajiv Kheti Mandal
15. Dr Debal Deb, Ecologist, Centre for Inter-Disciplinary Studies, Kolkata
16. Dr Nandita Shah, SHARAN Auroville
17. Dr Tarak Kate, Dharamitra, Wardha, Maharashtra
18. Dr G. Sivaraman, Poovulagin Nanbargal, Chennai
19. Dr Ponnammal Natarajan, Retd Dean, Anna University
20. Dr (Ms) Suhas Kolhekar, National Convener, National Alliance of People’s Movements, Pune
21. Gopi Devarajan, OFM-Organic Farmers Market
22. Harinesh Pandya, JANPATH network-Gujarat, Ahmedabad
23. Himanshu Limbasiya and Kantibhai Bhut, Saurashtra Sajiv Kheti Manch
24. Jagannathan, Nalla keerai, Thiuvellore
25. Jagdish Patel, People’s Training and Research Institute, Vadodara
26. K. Jagadeesan, Advisor, Federation of Tamil Nadu Rice Mill Owners Association
27. Kapil Shah, JATAN, Vadodara and National Secretary, Organic Farming Association of India (OFAI)
28. Karpagam, organic farmer, Point Return, Maduranthagam, Tamil Nadu
29. Kavitha Kuruganti, Alliance for Sustainable & Holistic Agriculture (ASHA), Bangalore
30. Kirankumar Vissa, Rythu Swarajya Vedika, Telangana & Andhra Pradesh
31. Lali Dhakar – President, Ekal Nari Shakti Sangathan, Rajasthan
32. Manoj Solanki, Ramkrishna Trust, Madhapur- Kutch.
33. Nachiket Udupa, concerned citizen, Delhi
34. Narhari Mahato, Secretary General, All India Agragami Kissan Sabha (AIAKS)
35. Nawab Khan, Bhopal Gas Peedit Mahila Purush Sangharsh Morcha
36. Nirmal Chandel – Convener – National Forum for Single Women’s Rights
37. Pamayan, Thalaanmai Uzhavar Iyakam
38. Parthasarathy, Organic Farmer, Chennai
39. Parul Chaudhary, Rajasthan
40. Parul Zaveri, Kaninika Organic Farm, Ahmedabad
41. Patel Kaushil N, Organic retailer, Vadodara
42. Patel Trushna K, Organic retailer, Vadodara
43. Rachna Dhingra, Satinath Sarangi, Bhopal Group for Information and Action
44. Radhika Rammohan, Restore, Chennai
45. Rajanibhai and Narshibhai, Sabarkanha Sajiv Kheti Manch
46. Ramasubramanian, Samanvaya Consulting, Chennai
47. Ramesh Chandran, Anantha Trust, Coimbatore
48. Rashida Bee, President, Bhopal Gas Peedit Mahila Stationery Karmchari Sangh
49. Ravi Kanneganti, Convenor, Telangana Rythu Joint Action Committee
50. Rohit Parakh, India For Safe Food, Mumbai
51. Sangeetha Sriram, Restore Gardens, Chennai
52. Selvam Ramaswamy, Tamil Nadu Organic Farmers Federation, Erode
53. Shailesh Vyas and Ramesh, Satvik, Bhuj
54. Shrenik Shah, Bhavnagar, Gujarat.
55. Sivakumar, Nalla Sandhai, Thiruvellore
56. Sreedevi L, Bio Basics, Coimbatore
57. Subhash Lomte Convenor National Campaign Committee for Rural Workers & Jai Kisan Andolan (Swaraj Abhiyan)
58. Sujatha Mahesh, Organic Farmer, Pondicherry
59. Suresh Lakshmipathy, Tula India, Chennai
60. Umendra Dutt, Kheti Virasat Mission, Punjab
61. Vasant Futane, Organic Farmer, Village Rawala, Warud Tehsil, Dist. Amravati
62. Vinay – Charul, Loknaad, Ahmedabad
63. Vinita Mansata, Earthcare Books, Kolkata
64. Yatri Baxi, Paryavaran Santri, Ahmedabad