The Era of Corporate Consolidation and the End of Competition Bayer-Monsanto, Dow-Dupont, and Chemchina-Syngenta
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Research Brief October 2018 The Era of Corporate Consolidation and the End of Competition Bayer-Monsanto, Dow-DuPont, and ChemChina-Syngenta DISRUPT ECOSYSTEM ACCLERATE MONOPOLY THE EFFECTS OF CORPORATE CONSOLIDATION UNDERMINE FOOD SECURITY HARM SMALL PRODUCERS HAASINSTITUTE.BERKELEY.EDU This publication is published by the Haas Institute for a Fair and Inclusive Society at UC Berkeley This research brief is part of the Haas Institute's Shahidi Project from the Global Justice Program. The Shahidi Project (Shahidi is a Swahili word meaning “witness”) intends to demystify the power structures and capacities of transnational food and agricultural corporations within our food system. To that end, researchers have developed a robust database focusing on ten of the largest food and agricultural corporations in the world. See more at haasinstitute.berkeley.edu/shahidi. About the Authors Copyeditor Support Elsadig Elsheikh is the director Marc Abizeid Special thanks to the Food of the Global Justice program and Farm Communications at the Haas Institute for a Infographics Fund, which provided the seed Fair and Inclusive Society at Samir Gambhir funding for the Shahidi project. the University of California- Berkeley, where he oversees Report Citation Contact the program’s projects and Elsadig Elsheikh and Hossein 460 Stephens Hall research on corporate power, Ayazi. “The Era of Corporate Berkeley, CA 94720-2330 food system, forced migration, Consolidation and The End of Tel 510-642-3326 human rights, Islamophobia, Competition: Bayer-Monsanto, haasinstitute.berkeley.edu structural marginality and Dow-DuPont, and ChemChina- inclusion, and trade and Syngenta.” Haas Institute for development. a Fair and Inclusive Society at the University of California, Hossein Ayazi, PhD, is a Berkeley, CA. October 2018. project policy analyst with the haasinstitute.berkeley.edu/ Global Justice program at the shahidi Haas Institute for a Fair and Inclusive Society. His work addresses US and global food systems, agri-environmental policy, globalization, neoliberalism, forced migration, race, culture, state power, and social movements. He has co-authored reports on the US Farm Bill, the Trans-Pacific Partnership, and global forced migration. Introduction IN THE PAST TWO YEARS ALONE, three major cor- products for agricultural, automotive, construction, porate mergers have begun to reshape what was consumer, electronics, packaging, and other in- an already concentrated international market for dustrial markets. In April 2017, the European Com- agricultural chemicals, seeds, and fertilizers. If mission conditionally approved the $130 billion the mergers gain approval from their relevant reg- merger between the two US companies.4 The two ulatory agencies, these six multinational corpo- companies will have combined assets of $121.79 rations would fold into three (Dow-DuPont, Bay- billion, and a total revenue of $63.25 billion.5 er-Monsanto, and ChemChina-Syngenta), and In the third case, the Chinese state-owned chem- have a profound impact on the future of global ical and seed company ChemChina purchased agriculture. The mergers would drastically re- Syngenta, the Swiss agricultural company which duce competition in the areas of crop protection, produces seeds and agrochemicals. In April 2017, seeds, and petrochemicals; further consolidate the $43 billion merger won US antitrust approval, the agrochemical market; reduce procompetitive though it remains contingent on approval from research and development (R&D) collaborations; China, Europe, India, and Mexico. Their joint assets and, most urgently, pose a critical danger to eco- would amount to $142.4 billion, with a $70.67 system sustainability and exacerbate the global billion total revenue if it receives final approval.7 climate crisis.1 Altogether, the combined assets across the three In the first case, in September 2016, the German new companies would amount to $352.14 bil- multinational life sciences, pharmaceutical, and lion and their combined total revenue would be chemical company Bayer bought out Monsanto, $189.76 billion. These deals alone will place as the US multinational agrochemical and agricultural much as 70 percent of the agrochemical industry biotechnology conglomerate known for producing and over 60 percent of commercial seeds in the genetically modified (GM) seeds. On March 21, hands of only three companies.8 2018, Bayer won antitrust approval by the Euro- pean Union’s European Commission for its $62.5 These mergers are emblematic of rampant mar- billion bid for Monsanto, and on May 29, the US ket concentration across a number of global Justice Department approved the acquisition,2 agricultural input industries. Between 1994 and with the companies’ joint assets now amounting 2013, the four firms (BASF, Bayer-Monsanto, to $87.95 billion, and a total combined revenue of Dow-DuPont, and ChemChina-Syngenta) com- $55.84 billion.3 bined market share jumped from 21.1 percent to 44 percent in crop seed and biotechnology; In the second case, in April 2017, DuPont, the from 28.5 percent to 62 percent in agrochem- US chemicals company that works in agricultural, icals; from 28.1 percent to 56 percent in farm advanced materials, electronics, and bio-based machinery; and from 32.4 percent to 55 percent industries, merged with Dow Chemical, the US in animal health.9 multinational chemical conglomerate developing haasinstitute.berkeley.edu The Era of Corporate Consolidation and the End of Competition 3 A Global Food System in Disarray THE NEGATIVE EFFECTS of such mergers can be yet Sonofi-Aventis remained a financially distinct felt on a much finer scale too, with merger-favor- pharmaceutical company. ability being relatively dismal among producers By the 2000s, six companies that focused on themselves. With regard to Bayer’s plans to agricultural, pharmaceutical, and chemical prod- acquire Monsanto, a 2016 survey found that 67 ucts held control over a majority of the global percent of farmers felt the move was negative, proprietary (i.e. brand-name) seed and agro- with only 10 percent indicating it was positive. chemical market: BASF (the German chemical With regard to ChemChina’s plans to acquire company and the largest producer in the world Syngenta, a 2016 survey found that more than 80 with subsidiaries and joint ventures in more than percent of farmers had a negative or very negative 80 countries), Bayer, Dow Agrosciences, DuPont, opinion of the merger. Such opinions suggest that Monsanto, and Syngenta. the vast majority of farmers have had a negative experience of increasing corporate consolidation Together, these corporations from the US, Ger- and corporate power, despite the pro-farmer nar- many, and Switzerland constitute what many have rative put forth by such corporations themselves.10 called the “Big Six.” They have been called this because they have had a dangerous chokehold on the global agricultural market, with effectively From the “Big Six” unrivaled national and international political influ- ence. For example, in 2013, these six companies to the “Big Four” accounted for almost $23 billion in sales of seeds The trend toward concentration of power among and biotech traits and $38.5 billion in sales of ag- agricultural, pharmaceutical, and chemical firms rochemicals, for a total of $61.5 billion per annum, has been longstanding. During the 1990s there ultimately maintaining control of 63 percent of the were numerous mergers between such firms commercial seed market and 75 percent of the that aimed to take advantage of potential syn- agrochemical market.11 ergies and secure even greater corporate profit These corporations were also called the “Big Six” and strength. But since the mergers took place because of their overwhelming influence with within the globalized market where most agricul- regard to the global agricultural research agenda. tural, pharmaceutical, and chemical markets exist For example, in 2013, these companies collec- across different countries, these expected syner- tively spent $4.7 billion annually for research on gies were ultimately not realized. seeds and pesticides—75 percent of all such pri- Instead the result was the spinoff of numerous vate sector research.12 agricultural divisions: Monsanto, for example, With these and other mergers, however, the “Big merged with Pharmacia and Upjohn before a new Six” in the agricultural seed, chemical, and traits Monsanto division—now focusing on agriculture— area are rapidly becoming the “Big Four”: BASF, separated to form an altogether different entity. Bayer-Monsanto, Dow-DuPont, and ChemChi- Syngenta began with the merger between the na-Syngenta. A number of other mergers in agribusiness divisions of Novartis and Zeneca. recent years—most involving these corporations— However, AstraZeneca, which focuses on phar- have also characterized this trend in consolida- maceuticals, remains a separate company. Bayer tion. As of April 2017, Sinochem and ChemChina acquired the agribusiness operations of Aventis, were in merger talks to create the world’s largest haasinstitute.berkeley.edu The Era of Corporate Consolidation and the End of Competition 4 industrial chemicals firm. In October 2017, BASF Yet the massive mergers of Monsanto and Bayer announced that it is acquiring a large portfolio of (the first and third largest biotechnology and seeds and herbicides from Bayer for $7 billion, seed firms in the world, respectively), the merger making BASF a major player in the seed market. of Dow and DuPont (the fourth and fifth largest