1. Concentration and Competition in Seeds
James MacDonald
University of Maryland
jmacdon2@umd.edu
IFPRI-AMIS Webinar
September 7, 2023

2. Between December, 2015 and September, 2016
3 major mergers were announced
• Bayer Would Acquire Monsanto
• Dow and DuPont Would Merge
• ChemChina Would Acquire Syngenta
The world’s six large seed and agrochemical firms would
combine into four: Bayer, Corteva, ChemChina, & BASF
The competitive issues in those mergers remain relevant
for research-intensive food and ag sectors

3. US Antitrust Laws Prohibit Mergers that “May
Substantially Lessen Competition”
• Two issues for enforcement authorities:
• Will a merger lead to higher prices for seed and
chemical products?
• Will a merger lead to reduced competition in innovation,
with less research and fewer innovations in the future?

4. Specific US Markets of Concern, in Bayer-Monsanto
Vegetable & melon seeds
Carrot seeds: 94%
Cucumber seeds: 90%
Onion seeds: 71%
Tomato seeds: 55%
Genetically modified seed traits
HT cotton: 99%
IR cotton: 85%
HT soy: 81%
Other markets
HT canola seeds: 74%
Foundational herbicides: 60%
Nematicidal seed treatments: 90%
So the focus is on highly concentrated markets—1-4 competitors.
And many seed & chemical markets are highly concentrated
Combined Bayer-Monsanto Market Share

5. Competition and Prices
• Concentration matters: will a merger leave 2, instead
of 3, competitors? 3 instead of 4?
• Will prices then ↑? That also depends:
• Competition among product types matters. Can buyers
easily shift to a competing chemical product?
• Note that this question also encompasses buyers’ perceptions, and
ease of switching among sellers.
• Ease of entry matters: if a merger combines the only rivals,
and they raise price, how likely is it that another firm would
enter the market?
• Low concentration, easy entry, ease of buyer switching, and
substitute products all limit the opportunity to ↑ prices
• And make it less likely that a merger will be opposed

6. Competition and Innovation
• Will a merger enhance the ability to innovate?
• Perhaps by combining complementary research
organizations?
• Or by providing size and scale for research?
• Alternatively, will it reduce the incentive to innovate?
• Consider the extreme: your new product simply cannibalizes
sales from your old products.
• Example: merger between the only two rivals
• The likely gains from a research investment will then be much
smaller than if sales were going to be drawn from rivals
• In that case, why invest in research?

7. Innovation Issues Are of Growing Importance
in Antitrust Enforcement
• Most food system merger cases focused on pricing
• For example, JBS-National Beef, Cargill-Continental Grain, &
Albertsons-Kroger
• But innovation plays a growing role
• For example, Precision Planting (Monsanto-Deere)
• And now, Bayer-Monsanto and Dow-DuPont
• For the future: chemicals, seeds, equipment, breeding, digital

8. What Happened?
• The mergers proceeded, subject to significant
divestitures (asset sales to other firms)
• Syngenta-ChemChina: some generic products
• Dow-DuPont: DuPont pesticide businesses & crop
protection R&D organization sold to FMC
• Bayer-Monsanto: Bayer seed & pesticides businesses sold
to BASF

9. Conclusions: The Big Issues
• Many seed, agricultural chemical, & equipment
markets are highly concentrated
• 1-4 rivals
• The economics of competition policy
• Can high concentration reduce research incentives and
investments? Under what circumstances?
• When do mergers lead to price ↑?
• Is current policy too lenient?
• Do divestitures work as a remedy for competition concerns in
mergers?