The letter details the groups’ analysis of the proposed merger, which would create the largest biotechnology and seed firm in the United States. According to the AAI, FWW, and NFU, this transaction would further consolidate an already highly concentrated biotechnology industry and would likely curtail innovation, raise prices, and reduce cultivation choices for farmers, consumers and the food system.

The groups urge the DOJ to critically review the implications of the deal. Their letter outlines three major areas of concern, including eliminating head-to-head competition in the corn and soybean markets, reducing vital innovation competition, and creating a large, integrated “platform” of traits, seeds, and chemicals that would make it harder for smaller biotechnology rivals to compete.

The AAI, FWW, and NFU point out that aggressive consolidation in agriculture, and particularly in the agricultural inputs sector, has changed the landscape for independent crop input companies as well as for independent producers. The current rumored or announced deals – e., Dow/DuPont and also including China National Chemical Corporation’s (“ChemChina”) proposed acquisition of Syngenta AG (“Syngenta”) and Bayer AG’s (“Bayer”) planned takeover of Monsanto Company (“Monsanto”) – would be a third wave of consolidation.

Two previous merger waves eliminated the majority of small to medium-sized biotechnology R&D firms to create the so-called Big 6, namely Monsanto, Syngenta, Bayer, DuPont, Dow and BASF.  “Any consolidation among the Big 6 agricultural biotechnology firms should raise significant antitrust concerns. We encourage the DOJ to move to stop it, as it has in other recent and unfixable mergers that would leave only a few large players,” said AAI’s President, economist Diana Moss.

The groups underline that investor documents note that elimination of duplicative research and development programs will contribute to the $1.3 billion in cost synergies produced by a merger of Dow’s and DuPont’s agriculture assets. But competitive R&D investments have been “crucial for driving innovation in an industry where the probability of commercial success is relatively low due to the time and cost associated with bringing a trait from research to market,” the letter explains.

“The Department of Justice must block this biotechnology mega-merger that would raise farmers’ prices and severely limit the choices for farmers, consumers and rural communities,” said FWW executive director Wenonah Hauter. “Today’s wave of agribusiness and food company mega-mergers is surrendering our food system to a corporate cabal that thwarts our efforts to build a fair and healthy food system.”

According to the letter, the proposed merger would create a powerful duopoly be-tween Dow/DuPont and Monsanto. Together, the two companies would control 76% of the market for corn and 66% of the market for soybeans, giving them the power to charge farmers higher prices and effectively decide which seeds farmers could plant.  (The numbers would be higher still if Monsanto were allowed to combine with Bayer, a potential transaction that is currently also being negotiated, though a merger is not certain.)

“Seed costs are the highest input expense for farmers. While some of the cost can be attributed to more sophisticated technology, we have seen time and again that consolidation and market restructuring has increased the cost of crop inputs.  In a lagging farm economy with multi-year trends of low commodity prices, additional cost increases for crop inputs could cripple a lot of family farms in this country,” said NFU President Roger Johnson.

The groups conclude that the proposed Dow/DuPont merger “would be difficult, if not impossible, to remedy.” The letter notes accumulating evidence on failed remedies in other mergers, the difficulty of finding viable buyers for divested assets, and the ineffectiveness of divesting assets to other members of the Big 6 firms.

“I speak for the entire AAI Board of Directors in enthusiastically welcoming Diana as our new President and CEO as of this coming January. She is ideally positioned to build on Bert’s powerful 17-year legacy and to take the AAI in new directions over the years ahead,” said Robert Skitol, Chairman of the AAI Board of Directors.

Dr. Moss was selected from a pool of prestigious candidates after a national search.  “I am honored, and grateful to the AAI Board for the opportunity to lead this really exceptional organization,” said Moss. “We’re moving into the next AAI “generation” with a talented staff and valuable, respected advisors that have helped us promote a unique and successful advocacy, research, and education agenda,” she added.

Outgoing President and CEO Bert Foer said of the transition and leadership handoff, “Diana has been my trusted right hand for 14 years.  She is a skilled competition advocate with strong connections in the antitrust and regulatory communities and has been instrumental in helping build the AAI into a leading, progressive competition advocacy organization.”

Moss, an economist, joined the AAI shortly after its creation, bringing with her public- and private-sector experience in antitrust and regulation.  At the AAI, Moss has effectively developed and expanded advocacy channels and strategies, and strengthened communications with enforcers, Congress, other advocacy groups, and the media. As Vice President since 2002, Moss has also extended the AAI’s competency in a number of industries that are a major antitrust focus, including energy, transportation, agriculture, telecommunications, and healthcare.

With the transition to new leadership, Mr. Foer will step into a new half-time role with a focus on international competition advocacy and competition culture.

Andre Barlow
(202) 589-1838
abarlow@dbmlawgroup.com