30 I EUROPEAN SEED I EUROPEAN-SEED.COM T he merger of Dow and DuPont, the acquisition of Syngenta by ChemChina, and the merger of Bayer and Monsanto have recently reshaped the global seed industry. Unsurprisingly, this consolidation wave has sparked worries among farmers, poli- cymakers and the broader public, who fear harmful consequences on prices, innova- tion and product choice. For instance, the European Commission’s Directorate- General for Competition received over a million petitions, e-mails and tweets by citizens expressing their concern about the Bayer-Monsanto merger, an unprece- dented level of public attention. However, the public debate around competition and concentration in seed markets was so far hindered by a lack of clear data in the public domain. This made it difficult to know the level of concentration in various markets, its causes, and its consequences. A recent study by the Organisation for Economic Co-operation and Development (OECD) sheds some light on these ques- tions. The report, “Concentration in Seed Markets: Potential Effects and Policy Responses”, was published in December 2018 and presents new, detailed evidence on the degree of market concentration in seed and GM technology across a broad range of crops and countries. It analy- ses the causes and potential effects of increasing concentration, explains how competition authorities in major markets responded to the mergers, and suggests policy options to stimulate competition and innovation in plant breeding. In this article we highlight some of the findings of the study, which is freely available in its entirety online. FROM BIG SIX TO BIG FOUR Consolidation in global seed markets is not a new phenomenon. Over the past three decades, a series of mergers and acquisitions created the “Big Six”: Monsanto, Bayer, BASF, Syngenta, Dow and DuPont. These firms were all active in crop protection chemicals and, with the exception of BASF, also had strong positions in seed and biotechnology. This combination of activities was not a coincidence, but illustrates the com- plementarities between these activities. Especially after the introduction of her- bicide tolerance, it made sense for firms to combine activities in pesticides, seed, and GM technology. Bringing these three technologies in-house made it easier to engage in research and development. The combination also had commercial bene- fits: selling more herbicide-tolerant seed would stimulate herbicide sales, and her- bicide sales in turn would stimulate sales of herbicide-tolerant seed. The recent merger wave reduces the number of major firms to four (Bayer-Monsanto, DowDuPont/Corteva, ChemChina-Syngenta, BASF). As with previous mergers and acquisitions, the current consolidation combines firms with complementary product portfolios. This is most obvious for ChemChina, which sold pesticides but had no activi- ties in the seed industry before its acqui- sition of Syngenta, but the same is true of the other mergers. Most of Dow’s agri- cultural sales came from crop protection chemicals, while most of DuPont’s sales NEW OECD STUDY SHEDS LIGHT ON CONCENTRATION AND COMPETITION IN SEED MARKETS. BY: KOEN DECONINCK From Big Six to Big Four USD billions Seeds and biotech Agricultural chemicals 0 5 10 15 20 25 Bayer-Monsanto ChemChina- Syngenta DowDuPont BASF Vilmorin KWS FIGURE 1: PRO FORMA SALES OF LEADING FIRMS AFTER MERGERS AND DIVESTITURES, 2017 came from seeds and GM traits. The com- bined firm thus ends up with a relatively balanced portfolio. Bayer was relatively stronger in crop protection chemicals while Monsanto was relatively stronger in seeds and GM traits. In markets where the mergers would have created a large increase in market concentration, competition authorities required substantial divestitures before allowing the merger. Bayer in particular has been required to divest almost its entire seed business, which was sold to BASF. Prior to the mergers BASF had only limited activities in seed, but it now emerges as an important player – again combining seed and GM technology with crop protection chemicals. HOW CONCENTRATED ARE SEED MARKETS? To highlight the importance of the recent mergers, some observers have claimed that just three companies now sell close to 60% of the world’s seed. These estimates are based on the sales figures of the firms Source: OECD estimates based on company annual reports.