EU clears Bayer’s acquisition of Monsanto

“We have approved Bayer’s plans to take over Monsanto because the parties’ remedies, worth well over €6 billion, meet our competition concerns in full. Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger. In particular, we have made sure that the number of global players actively competing in these markets stays the same. That is important because we need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices. And we need competition to push companies to innovate in digital agriculture and to continue develop new products that meet the high regulatory standards in Europe, to the benefit of all Europeans and the environment.” Said Commissioner Margrethe Vestager, in charge of competition policy.

Mergers: @Commission clears Bayer's acquisition of Monsanto, subject to conditions including divestiture of extensive remedy package addressing parties' overlaps in seeds, pesticides and digital agriculture https://t.co/fQqkuvQ5fk pic.twitter.com/RS9YpZufC7

— EU Competition (@EU_Competition) March 21, 2018

The European Commission has approved under the EU Merger Regulation the acquisition of Monsanto by Bayer. The merger is conditional on the divestiture of an extensive remedy package, which addresses the parties’ overlaps in seeds, pesticides and digital agriculture. As part of its in-depth review, the Commission has assessed more than 2,000 different product markets and reviewed 2.7 million internal documents. It concluded that the transaction as notified would have significantly reduced competition on price and innovation in Europe and globally on a number of different markets. The Commission also had concerns that it would have strengthened Monsanto’s dominant position on certain markets, where Bayer is an important challenger of Monsanto. The commitments submitted by Bayer meet these competition concerns in full, addressing the parties’ overlaps in seeds, pesticides and digital agriculture. On this basis, the Commission concluded that the divestment package enables a suitable buyer to sustainably replace Bayer’s competitive effect in these markets and continue to innovate, for the benefit of European farmers and consumers. Bayer has proposed BASF as purchaser for the remedy package. The Commission’s assessment is ongoing whether a) the divestiture to BASF meets all purchaser requirements, and b) whether it creates any problematic overlaps or raises other competition concerns. Bayer and Monsanto can only implement the transaction when the Commission has completed its review of the proposed buyer.

EU-China for fair global competition

“It is in our mutual interest to work together to promote fair global competition. Antitrust, merger review and State aid control are important tools in ensuring that consumers can benefit from competitive markets and companies can compete on their merits. Both the European Commission and the Chinese competition agencies will work closely together for a coherent and efficient competition enforcement.” Said Commissioner Margrethe Vestager.

.@EU_Commission and China start new dialogue on State aid control and discuss competition policy. @vestager meets Chairman He Lifeng and Vice Chairman Hu Zucai,of China's National Development and Reform Commission https://t.co/bYQe9u79uX pic.twitter.com/N9iv2XWckl

— EU Competition (@EU_Competition) November 16, 2017

Commissioner  Vestager, in charge of competition policy, Chairman He Lifeng and Vice Chairman Hu Zucai, both of China’s National Development and Reform Commission, held today in Beijing the first cooperation meeting on State aid control and Fair Competition Review as part of a new dialogue between the EU and China. At the meeting, the Commission and China’s National Development and Reform Commission reaffirmed the importance of cooperation on competition policy to ensure good economic relations between China and the EU. On 15 November, the Commissioner met Zhong Shan, China’s Minister of Commerce at the 10th meeting under the EU-China competition policy dialogue on antitrust and merger issues. Separately, the Commissioner also met State Administration of Industry and Commerce (SAIC) Minister Zhang Mao and the Chairman of China’s State-owned Assets Supervision and Administration Commission of the State Council (SASAC) Xiao Yaqing.

UK tax scheme for multinationals: EU opens investigation

“All companies must pay their fair share of tax. Anti-tax avoidance rules play an important role to achieve this goal. But rules targeting tax avoidance cannot go against their purpose and treat some companies better than others. This is why we will carefully look at an exemption to the UK’s anti–tax avoidance rules for certain transactions by multinationals, to make sure it does not breach EU State aid rules.” Said Commissioner Margrethe Vestager in charge of competition policy.

State aid: @EU_Commission opens in-depth investigation into UK tax scheme for multinationals https://t.co/VxSEQ4qcUh pic.twitter.com/yVBncK5Zbp

— EU Competition (@EU_Competition) October 26, 2017

The European Commission has opened an in-depth investigation into a UK scheme that exempts certain transactions by multinational groups from the application of UK rules targeting tax avoidance (the UK CFC rules). It will investigate if the scheme allows these multinationals to pay less UK tax, in breach of EU State aid rules.  The general purpose of the UK CFC rules is to prevent UK companies from using a subsidiary, based in a low or no tax jurisdiction, to avoid taxation in the UK. They reallocate income artificially shifted to offshore subsidiaries of UK parent companies to the UK for taxation. CFC rules in general are an effective and important feature of many tax systems to address tax avoidance. However, since 2013, the UK CFC rules include an exception for certain financing income (i.e. interest payments received from loans) of multinational groups active in the UK – the Group Financing Exemption. At this stage, the Commission has doubts whether this exemption complies with EU State aid rules. In particular, the Commission has doubts whether this exemption is consistent with the overall objective of the UK CFC rules. The Commission’s State aid investigation does not call into question the UK’s right to introduce CFC rules or to determine the appropriate level of taxation. The role of EU State aid control is to ensure Member States do not give some companies a better tax treatment than others. The opening of an in-depth investigation gives the UK and interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.

EU in-depth investigation for acquisition of Monsanto by Bayer

“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.” Said Commissioner Margrethe Vestager, in charge of competition policy.

The Commission has opened an in-depth investigation to assess the proposed acquisition of Monsanto by Bayer under the EU Merger Regulation. The Commission has concerns that the merger may reduce competition in areas such as pesticides, seeds and traits.

European Commission opens in-depth investigation into proposed acquisition of #Monsanto by #Bayer: https://t.co/JgquRBSxsj pic.twitter.com/YmqTUbcArt

— EU Agriculture (@EU_Agri) August 22, 2017

 

The proposed acquisition of Monsanto (US) by Bayer (Germany) would create the world’s largest integrated pesticides and seeds company. It would combine two competitors with leading portfolios in non-selective herbicides, seeds and traits, and digital agriculture. Both companies are active in developing new products in these areas. Moreover, the transaction would take place in industries that are already globally concentrated, as illustrated by the recent mergers of Dow and Dupont and Syngenta and ChemChina, in which the Commission intervened to protect competition for the benefit of farmers and consumers.

This week we demonstrated against the acquisition of #Monsanto by #Bayer. Here's why it would be bad news: https://t.co/UikQBpNkF7 #Baysanto pic.twitter.com/8XB5FQyUQJ

— Greens in the EP (@GreensEP) April 28, 2017

EU concerns

The Commission has preliminary concerns that the proposed acquisition could reduce competition in a number of different markets resulting in higher prices, lower quality, less choice and less innovation. In particular, the initial market investigation identified preliminary concerns in the following three areas:

• Pesticides
  Monsanto’s pesticide product glyphosate is the most sold non-selective herbicide in Europe. Bayer produces glufosinate ammonium, also a non-selective herbicide and one of the very few alternatives to glyphosate. According to the Commission’s preliminary investigation, Monsanto and Bayer are two of a limited number of competitors in this field capable of discovering new active ingredients and developing new formulations, including addressing the growing problem of weed resistance to existing products.
  In addition, the Commission will further assess both Monsanto’s activities in biological pesticide products that would compete with Bayer’s existing portfolio of chemical pesticide products, and the parties’ overlapping activities in products that tackle varroa mites, a parasite affecting bee colonies in Europe.
• Seeds
  Bayer and Monsanto are both active in the breeding of vegetable seeds. The Commission’s initial investigation shows that the parties have high combined market shares in a number of these vegetable seeds markets, and that some of their products compete directly with each other.
  Bayer and Monsanto are also active in the breeding and licensing of seeds for several field crops. Monsanto has the highest market share in oilseed rape seeds in Europe. Bayer, with the highest market share in oilseed rape seeds at global level, is one of the few players with the means to compete intensively in this market. Furthermore, both parties are important licensors of cotton seeds to their competitors in Europe, and both are investing in research and innovation programs for wheat.
• Traits
  A trait is a characteristic of a plant, such as height, herbicide tolerance and insect or disease resistance, and can be developed in laboratories and introduced in certain plant varieties.
  The Commission’s preliminary investigation indicates that Monsanto has a dominant position in several traits markets worldwide. Bayer is one of the few competitors to Monsanto in certain traits markets, and has notably developed alternative herbicide tolerance traits to Monsanto’s. The Commission will investigate in particular whether the transaction could lead to a reduction of competition in these markets, taking into account the existing links between the few worldwide competitors through cross-licensing and through research and development cooperations.

Finally, the merged entity would hold both the largest portfolio of pesticides products and the strongest global market positions in seeds and traits, making it the largest integrated company in the industry. The Commission will further investigate whether competitors’ access to distributors and farmers could become more difficult if Bayer and Monsanto were to bundle or tie their sales of pesticide products and seeds, notably with the advent of digital agriculture. Digital agriculture consists in the collection of data and information about farms with the aim of providing tailored advice or aggregated data to farmers. Both Bayer and Monsanto are currently investing in this emerging technology.

Given the worldwide scope of Bayer and Monsanto’s activities, the Commission is cooperating closely with other competition authorities, notably with the Department of Justice in the US and the antitrust authorities of Australia, Brazil, Canada and South Africa.

Commission approves aid for market exit of BPVI and Veneto Banca

Commission approves aid for market exit of BPVI and Veneto Banca under Italian insolvency law, involving sale of some parts to Intesa Saopaolo

The European Commission has approved, under EU rules, Italian measures to facilitate the liquidation of BPVIand Veneto Banca under national insolvency law. These measures involve the sale of some of the two banks’ businesses to be integrated into Intesa Sanpaolo. Deposits remain fully protected.

This announcement follows the declaration by the European Central Bank (ECB), in its capacity as supervisory authority, of23 June 2017 that Banca Popolare di Vicenza (BPVI) and Veneto Banca were failing or likely to fail and the decisions bythe Single Resolution Board (SRB), the competent resolution authority, that resolution action is not warranted in the public interest in either case. EU law foresees that, in such circumstances, national insolvency rules apply and it is for the responsible national authorities to wind up the institution under national insolvency law. In this context, if Member States consider public support necessary to mitigate the effects of a bank’s market exit, EU State aid rules apply, in particular the 2013 Banking Communication, requiring that shareholders and subordinated bondholders fully contribute to the costs (so-called “burden-sharing”) and competition distortions are limited. Senior bondholders do not have to contribute and depositors remain fully protected in line with EU rules.

Commissioner in charge of competition policy, Margrethe Vestager, said: “Italy considers that State aid is necessary to avoid an economic disturbance in the Veneto region as a result of the liquidation of BPVI and Veneto Banca, who are exiting the market after a long period of serious financial difficulties. The Commission decision allows Italy to take measures tofacilitate the liquidation of the two banks: Italy will support the sale and integration of some activities andthe transfer of employeesto Intesa Sanpaolo. Shareholders and junior creditors have fully contributed, reducing the costs to the Italian State, whilst depositors remain fully protected.These measures will also remove €18 billion in non-performing loans from the Italian banking sector and contribute to its consolidation.“

The SRB has concluded that resolution action is not warranted in the public interest for either BPVI or Veneto Banca, which means that Italian authorities have to wind-down the banks under Italian national insolvency procedures. In this context, Italy has determined that the winding up of these banks has a serious impact on the real economy in the regions where they are most active. Outside the European banking resolution framework, EU rules foresee a possibility for Italy to seek Commission approval for the use of national funds to facilitate the liquidation by mitigating such regional economic effects. As the aided banks exit the market there should be no distortion of competition in European banking markets.

Outside the European banking resolution framework, EU rules foresee a possibility for Italy to seek Commission approval for the use of national funds to facilitate the liquidation by mitigating such regional economic effects. As the aided banks exit the market there should be no distortion of competition in European banking markets.

On 24 June 2017, Italy notified to the Commission its plans to grant State aid to wind-down BPVI and Veneto Banca.The measures will enable the sale of parts of the two banks’ activities to Intesa, including the transfer of employees. Italy selectedIntesa Sanpaolo (Intesa) as the buyerin an open, fair and transparent sales procedure: The measures will also enable the wind down of the remaining liquidation mass, financed by loans provided by Intesa.

In particular, the Italian State will grant the following measures:

• Cash injections of about €4.785 billion; and
• State guarantees of a maximum of about €12 billion, notably on Intesa’s financing of the liquidation mass. The State guarantees would be called upon notably, if the liquidation mass is insufficient to pay back Intesa for its financing of the liquidation mass.

Both guarantees and cash injections are backed up by the Italian State’s senior claims on the assets in the liquidation mass. Correspondingly, the net costs to the Italian State will be much lower than the nominal amounts of the measures provided.

The Commission found these measures to be in line with EU State aid rules, in particular the 2013 Banking Communication. Existing shareholders and subordinated debt holders have fully contributed to the costs, reducing the cost of the intervention for the Italian State.Both aid recipients, BPVI and Banca Veneto, will be wound up in an orderly fashion and exit the market, while the transferred activities will be restructured and significantly downsized by Intesa, which in combination will limit distortions of competition arising from the aid.

The subsequent deep integration by Intesa will return the sold parts to viability. The Commission also confirmed that the measures do not constitute aid to Intesa, because it was selected after an open, fair and transparent sale process, fully managed by Italian authorities, ensuring that the activities were sold at the best offer available.

Antitrust: Commission opens formal investigation on clothing company Guess

The European Commission has opened a formal antitrust investigation into the distribution agreements and practices of clothing manufacturer and retailer Guess. The Commission will examine whether Guess illegally restricts retailers from selling cross-border to consumers within the EU Single Market.

Commissioner Margrethe Vestager, in charge of competition policy said: “The Commission has information indicating that Guess, in its distribution agreements, may ban cross-border sales to consumers. One of the key benefits of the EU’s Single Market is that consumers can shop around for a better deal. We are going to investigate Guess’ practices further to ensure that it’s playing by the rules and not preventing consumers from buying products across borders.”

Guess designs, distributes and licenses clothing and accessories. Guess’ apparel is marketed under numerous trademarks, including “GUESS?” and “MARCIANO“.

The Commission will investigate information indicating that Guess’ distribution agreements may restrict authorised retailers from selling online to consumers or to retailers in other Member States. They may also restrict wholesalers from selling to retailers in other Member States.

Companies are generally free to set up the distribution system that best serves them. However these systems must comply with EU competition rules. In particular, consumers must be free to purchase from any retailer authorised by a manufacturer, including across national borders.

Guess’s agreements under investigation may be in breach of EU competition rules (Article 101 of the Treaty on the Functioning of the European Union), which prohibit agreements between companies that prevent, restrict or distort competition within the EU’s Single Market.

In its recent final report on the e-commerce sector inquiry the Commission found that more than one in ten surveyed retailers experienced cross-border sales restrictions in their distribution agreements. Such restrictions limit their ability to sell online to consumers in other Member States.

The formal investigation launched today concerning Guess is a stand-alone procedure that is separate from the e-commerce sector inquiry but follows up on one of the issues identified in the inquiry’s final report.

EU agree on restructuring plan of Monte dei Paschi di Siena

Today, Commissioner Margrethe Vestager has reached an agreement in principle with Pier Carlo Padoan, the Italian Minister of Economy and Finance, on the restructuring plan of Monte dei Paschi di Siena (MPS) to enable the precautionary recapitalisation of the bank in line with EU rules. This follows intensive and constructive contacts between the Commission (at political level with Vice-President Dombrovskis and Commissioner Vestager), the European Central Bank (ECB) in its supervisory capacity and the Italian authorities.

EU rules, in particular the Bank Recovery and Resolution Directive (BRRD), offer a possibility for the State to inject capital into a solvent bank, provided that certain criteria are met (so-called “precautionary recapitalisation”). State aid in this context can only be granted as a precaution (to prepare for possible capital needs of a bank that would materialise if economic conditions were to worsen) and does not trigger resolution of the bank. The option of precautionary recapitalisations for solvent banks under the BRRD was agreed between co-legislators in the European Parliament and the Council.

Since a precautionary recapitalisation involves the use of taxpayer money, EU State aid rules make sure that public funds can only be injected in a bank that is profitable in the long-term. This requires the bank to undergo in-depth restructuring with the purpose of keeping its viability in the long-term. Furthermore, the State must be sufficiently remunerated for its capital injection and the bank’s shareholders and junior bondholders must contribute to the costs to limit the amount of taxpayer money.

Commissioner Margrethe Vestager, in charge of competition policy said: “This solution is a positive step forward for MPS and the Italian banking sector. It would allow Italy to inject capital into MPS as a precaution an, in line with EU rules, whilst limiting the burden on Italian taxpayers. MPS will undergo deep restructuring to ensure its viability, including by cleaning its balance sheet from non-performing loans. I hope this will enable MPS to focus on lending to the Italian businesses and support the Italian economy.“

Vice-President Valdis Dombrovskis, in charge of financial stability, said: “I am glad that together with the Italian authorities and following close cooperation with the SSM we found a way forward for MPS while respecting the Banking Union rules to safeguard financial stability and limit costs for taxpayers.”

This agreement in principle is conditional on the parallel confirmation by the ECB in its supervisory capacity that MPS is solvent and meets capital requirements and on Italy obtaining a formal confirmation from private investors that they will purchase the non-performing loans portfolio.

The Commission services will now engage with Italy on finalising the details of MPS’s final restructuring plan. Italy will need to notify this final restructuring plan, including the commitments by the Italian authorities on how to implement the plan. On this basis, the Commission will adopt its formal decision under EU State aid rules.