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DEPARTMENT OF JUSTICE COMPLAINT seeds with new genetically modified The United States of America, acting traits, as well as other innovative Antitrust Division under the direction of the Attorney products that improve yields for farmers. This competition is central to United States of America v. Bayer AG General of the United States, brings this civil antitrust action to prevent Bayer their businesses. Monsanto’s chief and Monsanto Company; Proposed technology officer has said that Final Judgment and Competitive AG from acquiring Monsanto Company. The United States alleges as follows: innovation is ‘‘the heart and soul of who Impact Statement we are.’’ Similarly, Bayer’s core strategy I. INTRODUCTION is to become the ‘‘most innovative’’ Notice is hereby given pursuant to the agricultural company in the world. Both Antitrust Procedures and Penalties Act, 1. Bayer’s proposed $66 billion acquisition of its rival, Monsanto, would companies invest significant sums of 15 U.S.C. § 16(b)–(h), that a proposed money into research and development Final Judgment, Stipulation and Order, combine two of the largest agricultural companies in the world. Across the and monitor each other’s efforts, and Competitive Impact Statement have spurring each other to work faster and been filed with the United States globe, Bayer and Monsanto compete to sell seeds and chemicals that farmers invest more to improve their offerings District Court for the District of and develop new products. For Columbia in United States of America v. use to grow their crops. This competition has bolstered an American instance, Monsanto recently developed Bayer AG and Monsanto Company, a seed treatment product that protects Civil Action No. 1:18–cv–1241. On May farming industry that contributes hundreds of billions of dollars a year to crops from destructive worms called 29, 2018, the United States filed a nematodes, directly challenging Bayer’s the economy, provides millions of jobs Complaint alleging that Bayer AG’s historic dominance in that space. The across the country, and ensures a safe proposed acquisition of Monsanto proposed acquisition would eliminate and reliable food supply for consumers Company would violate Section 7 of the this competition to develop new in the United States and around the Clayton Act, 15 U.S.C. § 18. The products that farmers will depend on for world. proposed Final Judgment, filed at the decades into the future. same time as the Complaint, requires 2. If allowed to proceed, the proposed 5. The merger would also Bayer AG to divest a substantial acquisition would transform the substantially lessen competition collection of assets relating to seeds and agricultural industry and harm through the vertical integration of the traits, crop protection, and digital competition across a broad range of two companies. Specifically, by agriculture. products. Most prominently, the combining Monsanto’s strong position acquisition would eliminate in seeds with Bayer’s dominant position Copies of the Complaint, proposed competition to develop and sell Final Judgment, and Competitive Impact in certain seed treatments, the merger genetically modified seeds in cotton, would give the combined company the Statement are available for inspection canola, and soybeans—three of the on the Antitrust Division’s website at incentive and ability to harm its seed largest crops grown in the United rivals by raising the price of those seed http://www.justice.gov/atr and at the States—and the herbicides that are Office of the Clerk of the United States treatments—a key input for genetically paired with these seeds to form the modified seeds. For example, today, District Court for the District of foundation of farmers’ weed-control Columbia. Copies of these materials may Bayer sells the only seed treatment that strategies. effectively controls a destructive pest be obtained from the Antitrust Division 3. These agricultural technologies upon request and payment of the called corn rootworm. Because Bayer emerged in the 1990s when Monsanto does not sell corn seeds itself, it has a copying fee set by Department of Justice introduced ‘‘Roundup Ready’’ soybeans, regulations. strong incentive to sell that seed which were genetically engineered to treatment to all corn seed companies, Public comment is invited within 60 resist Monsanto’s herbicide, Roundup. including Monsanto’s rivals. But the days of the date of this notice. Such Monsanto’s invention allowed farmers merger would change the calculus for comments, including the name of the who planted Roundup Ready soybeans Bayer because it would now own submitter, and responses thereto, will be to spray Roundup over the top of their Monsanto, the largest supplier of corn posted on the Antitrust Division’s crops, thereby killing the weeds without seeds in the United States. Armed with website, filed with the Court, and, under harming the crops. It was a wildly Monsanto’s strong position in corn certain circumstances, published in the popular invention; by 2005, almost 90% seeds, the merged company would Federal Register. Comments should be of U.S. soybean acres were planted with likely charge its seed rivals more for the mailed to Kathleen S. O’Neill, Chief, Roundup Ready seeds. In response, in seed treatment, knowing that they rely Transportation, Energy & Agriculture 2009, Bayer launched its own on the product and would be less able Section, Antitrust Division, Department ‘‘LibertyLink’’ genetically modified to compete effectively without it. of Justice, 450 5th Street NW, Suite soybeans, which were engineered to 6. Finally, the merger would eliminate 8000, Washington, DC 20530. withstand Bayer’s Liberty herbicide. head-to-head competition between Both companies have introduced similar Patricia A. Brink, Bayer and Monsanto to develop and sell innovations in cotton and canola, seeds for five types of vegetables: Director of Civil Enforcement. generating competition that has resulted tomatoes, carrots, cucumbers, onions, UNITED STATES DISTRICT COURT in higher crop yields, lower prices, and and watermelons. Although vegetable FOR THE DISTRICT OF COLUMBIA greater choice for American farmers. seeds are not genetically modified like Today, Bayer’s weed-control systems are cotton, canola, and soybeans, Bayer and United States of America, 450 5th Street NW, Suite 8000, Washington, DC 20530, the only competitive alternatives to Monsanto compete aggressively with Plaintiff, v. Bayer AG, Kaiser-Wilhelm-Allee Monsanto’s Roundup Ready systems in one another to breed higher-quality and 1, Leverkusen, Germany 51368, and cotton, canola, and soybeans. higher-yielding varieties. Monsanto Company, 800 North Lindbergh 4. Bayer and Monsanto also compete 7. By eliminating competition Boulevard, St. Louis, MO 63167, Defendants. head-to-head to develop the next between Bayer and Monsanto and Civil Action No.: 1:18–cv–1241 generation of transformative products, combining their businesses, the Judge James E. Boasberg including cotton, canola, and soybean proposed acquisition would result in

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higher prices, less innovation, fewer IV. RELEVANT MARKETS soybeans, the market structure differs choices, and lower-quality products for 14. As noted, Bayer and Monsanto across regions; thus, the relevant farmers and consumers throughout the compete across a broad range of geographic market is the southern United States and around the world. To agricultural products, including United States, where Bayer has focused prevent those harms, this unlawful genetically modified (GM) seeds and its soybean breeding program and been acquisition should be enjoined. traits for row crops; crop protection particularly successful. 17. For the relevant crop protection products, such as herbicides and seed II. DEFENDANTS AND THE products (foundational herbicides and treatments; and vegetable seeds. The TRANSACTION nematicidal seed treatments), the proposed acquisition would 8. Bayer is a life-sciences company geographic markets are national. Bayer substantially lessen competition in the based in Leverkusen, Germany. The and Monsanto sell these products company employs nearly 100,000 following 17 products: throughout the United States. In people worldwide and has operations in Bayer–Monsanto: Relevant Products addition, these products require U.S. almost 80 countries. Bayer has three GM Seeds and Traits regulatory approval, which is expensive main business lines: pharmaceuticals, Cotton: and time-consuming, so competition is which focuses on prescription • Herbicide-tolerant traits limited to products that have obtained medicines; consumer health, which • Insect-resistant traits the necessary approvals. Similar focuses on over-the-counter products; • GM cotton seeds products sold in other countries but not and its agricultural business, Bayer Crop Canola: approved for use in the United States Science. Over the past decade, Bayer • Herbicide-tolerant traits are not reasonable substitutes for Crop Science has become one of the • GM canola seeds American farmers. largest global agricultural companies. Soybeans: 18. For these reasons, in each of the Today, its crop protection business is • Herbicide-tolerant traits relevant geographic markets for seeds the second largest in the world, and its • GM soybeans and crop protection products, a seeds and traits business is also among Corn: hypothetical monopolist likely would the world’s largest. In 2016, Bayer Crop • GM corn seeds impose at least a small but significant Science had about $12 billion in annual Crop Protection and non-transitory increase in price. 19. Most of the relevant markets are revenues. Foundational herbicides already highly concentrated, and in 9. Monsanto, based in St. Louis, Nematicidal seed treatments: each market the merger would Missouri, is also a leading producer of • Corn significantly increase concentration. agricultural products. Monsanto • Soybeans The more concentrated a market and the employs more than 20,000 people in • Cotton almost 70 countries. As noted, in the more a transaction increases Vegetables 1990s, Monsanto pioneered a concentration in that market, the more • Carrot seeds revolutionary technology that enables • likely it is that the transaction will Cucumber seeds reduce competition. Concentration is certain crops to resist exposure to • Onion seeds glyphosate, the active ingredient in • typically measured by market shares Tomato seeds and by the widely-used Herfindahl- Monsanto’s Roundup herbicide. This • Watermelon seeds technology propelled Monsanto’s Hirschman Index (HHI). If the post- success: today, Monsanto is the leading 15. Each of these products is a transaction HHI would be more than global producer of seeds and traits and relevant product and line of commerce 2,500 and the change in HHI more than is among the world’s largest producers under Section 7 of the Clayton Act, 15 200, the transaction is presumed to of crop protection products. In 2017, U.S.C. § 18. The industry views these enhance market power and substantially Monsanto had almost $15 billion in products as separate business lines, and lessen competition. See, e.g., United annual revenues. they satisfy the well-accepted States v. Anthem, Inc., 855 F.3d 345, 10. On September 14, 2016, Bayer hypothetical monopolist test in the U.S. 349 (D.C. Cir. 2017). Given the high agreed to acquire Monsanto for Department of Justice and Federal Trade concentration levels and increases in approximately $66 billion. Commission Horizontal Merger concentration in the relevant markets in Guidelines, which asks whether a this case, the proposed acquisition III. JURISDICTION AND VENUE hypothetical monopolist likely would presumptively violates Section 7 of the 11. The United States brings this impose at least a small but significant Clayton Act. action, and the Court has subject-matter and non-transitory increase in price. A. Genetically Modified Seeds and jurisdiction, under Section 15 of the Such a price increase for these products Traits Clayton Act, 15 U.S.C. § 25, to prevent would not be defeated by substitution to and restrain Defendants from violating alternative products. 20. Several markets in this case Section 7 of the Clayton Act, 15 U.S.C. 16. The relevant geographic markets involve genetically modified seeds and § 18. in this case vary by product. For seeds traits. A genetic trait is simply an 12. Defendants are engaged in, and and traits generally, the markets are attribute of a plant, such as being tall, their activities substantially affect, regional because seeds are tailored to short, or leafy. Most traits derive from interstate commerce. Bayer and regional growing conditions (such as a plant’s natural DNA. Over the last 30 Monsanto sell agricultural products, weather and soil type) and suppliers can years, however, a small set of highly including seeds and crop protection charge different prices for seeds and sophisticated biotechnology firms— products, throughout the United States traits to customers in different regions. including Bayer and Monsanto—have and the world. With the exception of soybeans, successfully inserted DNA from other 13. Defendants have consented to however, virtually all of the regions organisms into the DNA of certain venue and personal jurisdiction in this affected by the merger have a similar crops, giving the crops a desirable trait district. Venue is also proper under market structure, so in this case it is associated with that non-native DNA. Section 12 of the Clayton Act, 15 U.S.C. appropriate to aggregate them to a For example, scientists have developed § 22, and 28 U.S.C. § 1391. national level for convenience. For traits that make crops resistant to certain

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pests, allowing farmers to reduce their leading suppliers of genetically 28. GM canola seeds. In 2016, use of chemical insecticides. And modified cotton seeds throughout the genetically modified canola seeds scientists have developed herbicide- United States. In addition to owning accounted for $83 million in sales in the tolerant traits that make crops resistant critical traits (discussed below), they United States, and virtually all canola to herbicides like Roundup, allowing a own extensive libraries of elite seed seeds contain genetically modified farmer to spray the herbicide over an varieties, which are essential for traits. Bayer’s canola innovations in entire field and kill the weeds without developing and commercializing recent years have allowed it to surpass harming the crops. A genetically competitive cotton seeds. If the Monsanto. In 2016, Bayer’s share of modified seed is simply a seed that transaction is allowed to proceed, Bayer genetically modified canola seeds in the contains DNA—and hence the desirable and Monsanto would have a combined United States was 60% and Monsanto’s trait—of a different organism. Farmers 59% share of genetically modified share was 14%. The post-transaction have embraced this technology: today, cotton seeds in the United States. The HHI would be approximately 5,600, more than 90% of the corn, soybeans, post-transaction HHI would be with an increase of approximately cotton, and canola seeds grown in the approximately 4,100, with an increase 1,700. United States are genetically modified. of approximately 1,500 resulting from 29. Herbicide-tolerant traits. Bayer These seeds provide farmers with the transaction. and Monsanto are even more dominant considerable savings in labor and 25. Herbicide-tolerant traits. Given in herbicide-tolerant traits for canola, expense, increased yields, and reduced the widespread adoption of genetically where they have a combined share of soil erosion by eliminating the need for modified cotton seeds, herbicide- 95%. Virtually all canola seeds planted tilling fields. Thus, a vast majority of tolerant traits are now used on in the United States contain either farmers do not view conventional seeds approximately 98% of the cotton acres Bayer’s LibertyLink trait or Monsanto’s as a reasonable substitute. in the United States. In 2017, Bayer and Roundup Ready trait. For these traits, 21. With the rise of genetically Monsanto accounted for virtually all of the post-transaction HHI would be modified crops, it has also become those acres, with about 19% of acres approximately 9,200, with an increase harder for smaller companies, which containing Bayer’s traits and about 80% of over 4,100. lack the massive resources necessary to containing Monsanto’s traits. The (3) Genetically modified soybeans devote to research and development, to merger would thus give Bayer a compete in these high-tech markets. It monopoly in these markets: the post- 30. After corn, soybeans are the typically takes hundreds of millions of transaction HHI would be largest crop grown in the United States. dollars and more than a decade to bring approximately 9,600, with an increase Soybeans are widely used in vegetable a genetically modified seed variety or a of approximately 3,000. Bayer and oil, packaged foods, and animal feed. In new pesticide to market. A company Monsanto are also competing 2017, U.S. farmers planted almost 90 must also have access to an extensive aggressively to develop the next million acres of soybeans, accounting library of high-quality seeds that are generation of herbicide-tolerant cotton for $4.6 billion in seed purchases, and necessary for research and plant traits. Farmers need these innovations to 94% of those acres contained herbicide- breeding. Today, such resources are combat the growing number of weeds, tolerant traits. The proposed acquisition increasingly controlled by four like pigweed, that have become would harm competition in the markets vertically integrated companies: increasingly resistant to glyphosate in for (1) genetically modified soybeans Monsanto, Bayer, DowDuPont, and recent years. Without the merger, these and (2) herbicide-tolerant traits for Syngenta, also known as the ‘‘Big Four.’’ new traits would likely compete in the soybeans. Although smaller independent seed future. 31. GM soybeans. Since launching companies also sell genetically modified 26. Insect-resistant traits. Bayer genetically modified soybeans in the seeds to farmers, most of those and Monsanto also compete for sales of 1990s, Monsanto has been the market companies license traits and seed insect-resistant traits that protect cotton leader. For years, Monsanto’s only varieties from Monsanto, limiting their from destructive pests such as moth and competitors were companies that relied ability to compete. bollworm larvae. In 2017, insect- on Monsanto for licenses to the 22. As described below, Bayer and resistant traits were used on Roundup Ready traits. Since 2009, Monsanto are close competitors in three approximately 88% of the cotton acres however, Bayer has emerged as a serious important row crops: cotton, canola, and in the United States. Bayer and threat: it has invested over $250 million soybeans. Monsanto accounted for approximately to develop an independent source of 85% of those acres, with about 10% of soybean varieties and in 2014 launched (1) Genetically modified cotton acres containing Bayer’s traits and about its own soybean business, Credenz, 23. Cotton is a major crop grown 75% containing Monsanto’s traits. The which sells varieties that perform well across the southern United States, post-transaction HHI would be in the southern United States. In 2017, particularly in states like Texas and approximately 7,400, with an increase Bayer had a 6% share of soybeans in Georgia. Cotton seeds are widely used in of approximately 1,400. that region and Monsanto had a 39% vegetable oil, packaged foods, and share. The post-transaction HHI in the animal feed, and cotton fibers are (2) Genetically modified canola southern United States would be widely used in clothing. In 2017, U.S. 27. Canola is an important crop used approximately 2,800, with an increase farmers planted about 12 million acres in vegetable oil, packaged foods, of approximately 500. of cotton and sales of cotton seeds biodiesel fuels, and animal feed. In the 32. Herbicide-tolerant traits. Bayer totaled over $800 million. For cotton, United States, canola is grown on and Monsanto also have the leading the proposed acquisition would harm approximately 1.7 million acres, mainly herbicide-tolerant traits for soybeans. competition in the markets for (1) in North Dakota, but also in several Monsanto’s Roundup Ready trait has genetically modified cotton seeds, (2) other states. The proposed merger historically dominated sales, but in herbicide-tolerant traits for cotton, and would harm competition in the markets recent years Bayer’s LibertyLink trait (3) insect-resistant traits for cotton. for (1) genetically modified canola seeds has made inroads. In 2017, Monsanto 24. GM cotton seeds. Bayer and and (2) herbicide-tolerant traits for had a 67% share of U.S. sales and Monsanto have long been the two canola. Bayer’s share had risen to 14%. (The

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remaining market participants use a Thus, this market is already highly (1) Nematicidal seed treatments for post-patent version of the original concentrated and the merger would corn, cotton, and soybeans Roundup Ready trait.) For herbicide- result in a post-transaction HHI of tolerant traits, the post-transaction HHI approximately 3,700, with an increase 40. The merger would eliminate head- would be approximately 6,900 on a of over 650. to-head competition for nematicidal seed treatments used on corn, cotton, national basis, with an increase of 36. Going forward, competition and soybeans. Nematicidal seed approximately 1,900. Without the between Bayer and Monsanto to develop treatments protect crops from parasitic merger, competition between the two next-generation weed-management roundworms known as nematodes. For companies would likely increase: Bayer systems is likely to increase. According corn, cotton, and soybean farmers, there and Monsanto each have new traits in to a Bayer strategy document, the are no cost-effective alternatives to their research pipelines that would company’s number one ‘‘Must Win nematicidal seed treatments. And, in confer tolerance to additional herbicides Battle’’ is to ‘‘[e]stablish LibertyLink as part because seed treatments must be and compete in the future. a foundation trait for broadacre [row] registered on a crop-by-crop basis, the crops and position Liberty herbicide as B. Foundational Herbicides treatments for each crop constitute a the superior weed management tool.’’ separate market. 33. In addition to competing to sell Bayer is also developing new non- herbicide-tolerant seeds, Bayer and selective herbicides for soybeans and 41. All three nematicidal seed Monsanto also compete to sell the corn called N,O-Chelators (NOCs), along treatment markets are highly foundational herbicides—glyphosate with traits conferring tolerance to NOCs. concentrated. For years, Bayer has had and glufosinate—that are paired with If successful, NOCs would form the a monopoly in the market for these seeds. basis of a new foundational herbicide nematicidal seed treatments for corn, 34. Foundational herbicides are system that would rival Monsanto’s with over a 95% share in 2017. Bayer herbicides used on row crops that have Roundup Ready-based systems. dominates the market for nematicidal two defining characteristics. First, they 37. Likewise, Monsanto is actively seed treatments for soybeans, with a are ‘‘non-selective,’’ meaning that they share over 85%. And, in the market for kill all types of weeds, thus providing pursuing innovations in foundational herbicides. For example, Monsanto is nematicidal seed treatments for cotton, farmers with the broadest possible Bayer and Syngenta currently share a protection for their crops. In contrast, developing an improved formulation of Roundup that is expected for release in duopoly. other types of herbicides are ‘‘selective,’’ 42. Although Monsanto does not meaning that they kill only certain types 2019. Bayer’s and Monsanto’s incentives currently sell in this market, it is poised of weeds. Selective herbicides are often to independently pursue these future to launch its first nematicidal seed used to supplement non-selective products in close competition with each treatment, NemaStrike. NemaStrike is herbicides but are not generally used in other would disappear post-merger. expected to challenge Bayer’s market lieu of them. Second, foundational C. Seed Treatments position in nematicidal seed treatments herbicides can be paired with seeds that in all three crops—corn, cotton, and are engineered to tolerate the herbicide. 38. In addition to relying on soybeans. Both Bayer and Monsanto Other non-selective herbicides are not a genetically modified seeds and project that NemaStrike will capture substitute for farmers because no seeds herbicides, farmers also protect their significant market share from Bayer. By are engineered to withstand them, so crops using seed treatments, which are spraying those herbicides over a crop coatings applied to seeds before they are acquiring Monsanto, Bayer would thus would damage it. For these reasons, planted. Seed treatments are a critical eliminate the most significant farmers have no good substitutes for tool for modern farmers, and today at competitive threat to its dominant foundational herbicides. Today, least one seed treatment is applied to position in these markets, to the glyphosate and glufosinate are the only the vast majority of genetically modified detriment of farmers who rely on these two foundational herbicides, but, as seeds grown in the United States. important products to protect their discussed further below, new Multiple seed treatments can be applied crops. foundational herbicides are in to a seed to protect it from various (2) Vertical foreclosure—insecticidal development. threats; seed treatments designed for seed treatments for corn rootworm and 35. Bayer and Monsanto are the one purpose (such as killing insects) are genetically modified corn seeds world’s leading producers of rarely an effective substitute for seed foundational herbicides. As noted treatments designed for a different 43. The merger would also likely above, glyphosate was developed by purpose (such as controlling fungal harm competition in the market for Monsanto and is the active ingredient in diseases). genetically modified corn by combining Roundup; glufosinate was developed by 39. The merger would likely result in Monsanto’s strong position in Bayer and is the active ingredient in three forms of competitive harm related genetically modified corn seeds with Liberty. Since the launch of genetically to seed treatments: (1) the loss of head- Bayer’s dominant position in modified crops in the 1990s, Monsanto’s to-head competition between Bayer’s insecticidal seed treatments for corn Roundup has dominated the market. As and Monsanto’s nematicidal seed rootworm. some weeds have developed resistance treatments; (2) foreclosure effects 44. Corn is the largest crop grown in to glyphosate, however, farmers are resulting from the combination of the United States, accounting for over increasingly turning to Liberty. And Monsanto’s strong position in corn $8 billion in seed sales annually. The while glufosinate and glyphosate are seeds with Bayer’s dominant position in vast majority (92%) of U.S. corn seeds now off patent, competition from insecticidal seed treatments for corn are genetically modified. Monsanto is generic suppliers has not prevented rootworm; and (3) foreclosure effects the leading supplier of those seeds, Bayer and Monsanto from maintaining resulting from the combination of effectively controlling 50% of the branded price premiums. In 2017, Bayer Monsanto’s strong position in soybeans market between sales of its own branded had a 7% share of the market for with Bayer’s dominant position in seeds and sales through its licensees. foundational herbicides in the United fungicidal seed treatment for sudden Monsanto’s only significant rival for States, and Monsanto had a 53% share. death syndrome. corn seed is DowDuPont (with a 34%

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share); a few smaller companies also expected to continue to grow steadily and Monsanto dominating the market have a small share. over the next decade. with 34% and 56% market shares, 45. Although Bayer does not sell corn 50. If allowed to proceed, the merger respectively. The post-acquisition HHI seeds, it does sell a critical seed would combine Monsanto’s leading would be approximately 7,900, with an treatment called Poncho. When Poncho genetically modified soybeans with a increase of approximately 3,700. is applied at a high rate (with a greater key input used on those seeds (ILeVO). 55. The effects of the acquisition amount of the seed treatment coating As a result, the merged company would would be particularly significant in the per seed), it protects corn seeds from likely hinder its soybean rivals by pickling cucumber seed segment, which corn rootworm—a pest nicknamed ‘‘the forcing them to pay more for ILeVO or makes up a large majority of cucumber billion dollar bug’’ for the amount of by denying them access to it entirely. acres in the United States. Bayer and loss it costs farmers each year. Poncho This loss of competition would likewise Monsanto are two of only three is the only significant seed treatment make it harder for Monsanto’s rivals to suppliers of pickling cucumber seeds in that effectively combats corn rootworm. compete, and it would result in higher the United States, with Monsanto as the Thus, most of Monsanto’s corn seed prices and fewer choices for genetically dominant competitor, followed by Bayer rivals depend on Poncho and are modified soybeans. and a company called Rijk Zwaan, expected to become more dependent as based in the Netherlands. As in other the corn rootworm problem grows. D. Vegetable Seeds markets, Bayer has competed against 46. By placing Bayer’s Poncho and 51. Finally, the proposed acquisition Monsanto in this segment through Monsanto’s leading GM corn seed under would eliminate vital competition innovation, developing seedless the control of one company, the between Bayer and Monsanto for the varieties of pickling cucumbers to transaction would give the merged sale of vegetable seeds. In the past 25 compete with Monsanto’s seeded company the incentive and ability to years, global vegetable production has varieties. foreclose its corn seed rivals who lack doubled as breeders have developed their own seed treatment product and new varieties of vegetables with better (3) Onion seeds rely on an independent Bayer for their disease resistance and higher yields. 56. Bayer and Monsanto are the two seed treatment supply. Specifically, the Unlike with row crops, however, these largest onion seed producers in the merged company would likely hinder improvements are due entirely to United States and globally, with its corn seed rivals by forcing them to traditional plant breeding rather than substantial sales across a wide variety of pay more for Poncho or by denying genetic modification. Bayer and onion segments. The U.S. market for them access to it entirely. This loss of Monsanto are leaders in these efforts. onion seeds is already highly competition would ultimately hit the Today, Monsanto is the largest vegetable concentrated—besides Bayer and pocketbooks of American farmers. By seed company in the world and Bayer Monsanto, the only other producers are making it harder for Monsanto’s corn is fourth largest. If the merger is allowed Bejo Zaden B.V., based in the rivals to compete, farmers would pay to proceed, the combined company Netherlands, and American Takii, Inc., higher prices and have fewer effective would dominate the industry, with based in California. The merger would choices for genetically modified corn global sales rivaling the combined sales give the combined company a share of seeds throughout the country. of the second- and third-largest approximately 71%. The post- transaction HHI would be (3) Vertical foreclosure—fungicidal vegetable producers (Syngenta and approximately 5,000, with an increase seed treatments for sudden death Limagrain, respectively). In the United of approximately 2,500. syndrome and genetically modified States, the merger would harm soybeans competition for five distinct vegetable (4) Tomato seeds species: carrots, cucumbers, onions, 47. Similarly, the merger would harm tomatoes, and watermelons. 57. Bayer and Monsanto are two of the competition by combining Monsanto’s largest producers of tomato seeds in the leading position in genetically modified (1) Carrot seeds United States, with market shares of soybeans with Bayer’s dominant 52. In the United States, Bayer and 21% and 34%, respectively. The market position in fungicidal seed treatments. Monsanto are the dominant producers for tomato seeds is moderately 48. As discussed above, Monsanto of carrot seeds with a combined market concentrated, and the merger would leads the market for genetically share of approximately 94%. The post- result in a highly concentrated market. modified soybeans. It is followed by transaction HHI would be The post-transaction HHI would be DowDuPont, with Bayer emerging as a approximately 8,800, with an increase approximately 3,000, with an increase threat and investing heavily to gain of approximately 4,000 resulting from of approximately 1,400. share. Smaller players, such as Beck’s, the transaction. (5) Watermelon seeds also serve the market. 53. While competition would be 49. Bayer also sells ILeVO, the only harmed in the market for carrot seeds as 58. Lastly, the watermelon seed seed treatment that effectively protects a whole, the effects of the acquisition market is already highly concentrated, soybeans from a fungal disease called would be particularly acute in the ‘‘cut- with Bayer and Syngenta, followed by sudden death syndrome (SDS). and-peel’’ carrot segment, which Monsanto, as the largest suppliers in the According to Bayer, SDS costs farmers consists of certain carrot varieties that United States. Bayer has a 37% market an average of over 44 million bushels in are processed and sold as ready-to-eat share in watermelon seeds, and lost yield per year, and losses from SDS baby carrots. Bayer and Monsanto are Monsanto has a 6% share. As a result, damage are expected to increase, particularly close competitors in this the post-acquisition HHI would be making Bayer’s seed treatment a critical segment, which constitutes approximately 3,300, with an increase tool for farmers in areas where SDS is approximately 80% of all carrots of approximately 400. Monsanto’s a particular risk. Bayer sells ILeVO to consumed in the United States. market share in watermelon seeds Monsanto’s soybean rivals, including understates its competitive significance; DowDuPont and Beck’s. Since the (2) Cucumber seeds its recent introduction of competitive launch of ILeVO in 2015, Bayer’s sales 54. The market for cucumber seeds is seedless watermelon varieties, which of ILeVO have doubled annually and are also highly concentrated, with Bayer are in high demand and already offered

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by Monsanto’s competitors, would recognized, barriers to entry in the lllllllllllllllllllll significantly improve its position going relevant markets are extraordinarily Caroline E. Laise, forward. high. Assistant Chief, Transportation, Energy & 63. In addition to the difficulty of Agriculture Section. V. ANTICOMPETITIVE EFFECTS entry, the proposed acquisition is lllllllllllllllllllll 59. The proposed acquisition would unlikely to generate verifiable, merger- Scott I. Fitzgerald, substantially lessen competition and specific efficiencies that would offset Benjamin H. Able, harm consumers in each of the relevant the proposed acquisition’s likely Don Amlin (D.C. Bar #978349), Meagan K. Bellshaw, markets, either by eliminating head-to- anticompetitive effects in the relevant head competition between Bayer and Cory Brader Leuchten, markets. Michele B. Cano, Monsanto or, in the case of certain seed VII. VIOLATIONS ALLEGED Barbara W. Cash, treatments, raising the price of a key Katherine A. Celeste, input. In each of these markets, the 64. Bayer’s proposed acquisition of Aaron Comenetz (D.C. Bar #479572), merger would likely result in higher Monsanto is likely to substantially Erin L. Craig, prices, lower quality, and reduced lessen competition in the relevant Emma Dick, choice. The price effects in these markets in violation of Section 7 of the J. Richard Doidge, markets would likely result in hundreds Clayton Act, 15 U.S.C. § 18. Julie Elmer (D.C. Bar #1520972), of millions of dollars per year in harm, 65. Unless enjoined, the proposed Jeremy Evans (D.C. Bar #478097), acquisition would likely have the Andrew J. Ewalt (D.C. Bar #493433), raising costs to farmers and consumers Tracy Fisher, throughout the United States. following anticompetitive effects in the Rachel A. Flipse, 60. But the harm does not stop there. relevant markets: Leah Graham (D.C. Bar #989727), The merger would also have a (a) eliminate present and future Brian Hanna, significant impact on innovation. competition between Bayer and John A. Holler, Today, four companies dominate the Monsanto; Rachelle R. Ketchum, industry’s research and development (b) lessen innovation; Amanda Klovers, efforts for seeds and traits. Bayer and (c) raise prices for farmers and other Patrick Kuhlmann, Monsanto are the industry leaders, with purchasers; and Robert A. Lepore, Bayer emerging as a threat to (d) reduce quality, service, and choice Michelle Livingston (D.C. Bar #461268), for farmers and other purchasers. Njeri Mugure, Monsanto’s dominance. In 2016, for Michael Nash, example, Bayer spent more on seeds- VIII. REQUEST FOR RELIEF John R. O’Gorman, related research and development as a Scott Reiter, percentage of sales than any of the other 66. The United States requests that James A. Ryan, Big Four. As leading innovators, Bayer this Court do the following: Julia A. Schiller (D.C. Bar #986369), and Monsanto push each other to (a) adjudge Bayer’s proposed Adam T. Severt, improve their current products and acquisition of Monsanto to violate Patricia L. Sindel (D.C. Bar #997505), technologies, monitor each other’s Section 7 of the Clayton Act, 15 U.S.C. Chinita M. Sinkler, Mark Tobey, research efforts, and compete to develop § 18; (b) permanently enjoin Bayer and Scott A. Westrich, new blockbuster products. Christopher M. Wilson, 61. Without the merger, this Monsanto from consummating their proposed acquisition or from entering Catharine Wright. competition would intensify as both Attorneys for the United States. companies pursue what the industry into or carrying out any other agreement, understanding, or plan by U.S. Department of Justice Antitrust Division refers to as integrated solutions— 450 5th Street, NW, Suite 8000 Washington, combinations of seeds, traits, and crop which control of the assets or businesses of Bayer and Monsanto would be DC 20530 Tel.: (202) 353–3863 Fax: (202) protection products, supported by 616–2441 E-mail: [email protected]. digital-farming technologies and other combined; (c) award the United States its costs services. Although integrated solutions UNITED STATES DISTRICT COURT of this action; and are still evolving, it is widely believed (d) award the United States other FOR THE DISTRICT OF COLUMBIA that only the Big Four companies—each relief that the Court deems just and United States of America, Plaintiff, v. with its own unique strengths—will be proper. Bayer AG, Monsanto Company, and BASF able to offer fully integrated solutions to SE, Defendants. Dated: ______farmers. With this merger, that Civil Action No.: 1:18–cv–1241 competition would be lost. Respectfully submitted, Judge James E. Boasberg FOR PLAINTIFF UNITED STATES OF VI. ABSENCE OF COUNTERVAILING AMERICA: PROPOSED FINAL JUDGMENT FACTORS lllllllllllllllllllll WHEREAS, Plaintiff United States of 62. Entry would not prevent the Makan Delrahim, America filed its Complaint against merger’s likely anticompetitive effects. Assistant Attorney General for Antitrust. Bayer AG (‘‘Bayer’’) and Monsanto It takes many years and hundreds of lllllllllllllllllllll Company (‘‘Monsanto’’) on May 29, millions of dollars to discover new crop Bernard A. Nigro, Jr. (D.C. Bar #412357), 2018; Deputy Assistant Attorney General. protection chemicals and to develop AND WHEREAS, pursuant to a and commercialize new traits. Once a lllllllllllllllllllll Stipulation and Order among Bayer, new trait has been discovered, Donald G. Kempf, Jr., Deputy Assistant Attorney General. Monsanto, and BASF SE (‘‘BASF’’) companies cannot successfully lllllllllllllllllllll (collectively, ‘‘Defendants’’) and incorporate that trait and sell seeds Patricia A. Brink, Plaintiff, the Court has joined BASF as without access to the extensive libraries Director of Civil Enforcement. a defendant to this action for the of elite seed varieties that are already lllllllllllllllllllll purposes of settlement and for the entry owned by Bayer, Monsanto, and a small Kathleen S. O’Neill, of this Final Judgment; number of other companies. As Bayer’s Chief, Transportation, Energy & Agriculture AND WHEREAS, Plaintiff and and Monsanto’s executives have Section. Defendants, by their respective

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attorneys, have consented to the entry of affiliates, partnerships and joint by or critical to the operation of the this Final Judgment without trial or ventures, and their directors, officers, Balance Herbicide Business, including, adjudication of any issue of fact or law, managers, agents, and employees. but not limited to, all data concerning and without this Final Judgment B. ‘‘Monsanto’’ means Defendant historical and current research and constituting any evidence against or Monsanto Company, a Delaware development efforts, including, but not admission by any party regarding any corporation with its headquarters in St. limited to, designs of experiments and issue of fact or law; Louis, Missouri, its successors and the results of successful and AND WHEREAS, Defendants agree to assigns, and its subsidiaries, divisions, unsuccessful designs and experiments. be bound by the provisions of this Final groups, affiliates, partnerships and joint G. ‘‘Broad Acre Seeds and Traits Judgment pending its approval by this ventures, and their directors, officers, Business’’ means Bayer’s global business Court; managers, agents, and employees. of researching, developing, AND WHEREAS, the essence of this C. ‘‘BASF’’ means Defendant BASF manufacturing, and selling broad acre Final Judgment is the prompt and SE, a Societas Europaea with its seeds and traits, including, but not certain divestiture of certain businesses, headquarters in Ludwigshafen, limited to, the global cotton seed rights, and assets by Bayer and Germany, its successors and assigns, business; the global canola seed Monsanto to assure that competition is and its subsidiaries, divisions, groups, business; the global soybean seed not substantially lessened; affiliates, partnerships and joint business; the global LibertyLink trait AND WHEREAS, Plaintiff requires ventures, and their directors, officers, business for all crops except rice; the Bayer and Monsanto to make certain managers, agents, and employees. global research and development divestitures to BASF for the purpose of D. ‘‘’839 Business’’ means Bayer’s programs for wheat and ‘‘canola remedying the loss of competition global business of researching, quality’’ Brassica juncea; and the global alleged in the Complaint; developing, and manufacturing the trait research and development AND WHEREAS, Bayer and Monsanto BCS–CT12839 pipeline product. activities. The Broad Acre Seeds and have represented to Plaintiff that all of E. ‘‘Balance Herbicide Business’’ Traits Business excludes those assets the divestitures required below can and means Bayer’s global business of that relate solely to the following: will be made as required by this Final researching, developing, manufacturing, hybrid rice sold in Asia, hybrid cotton Judgment, BASF has represented to and selling isoxaflutole-based sold in India, traditional juncea Plaintiff that it can and will acquire the herbicides for use on crops that are (mustard) and millet sold in India, Divestiture Assets pursuant to its isoxaflutole-tolerant as a result of cotton sold in South Africa, the research obligations under this Final Judgment, genetic modification. and development program for sugarcane and Defendants have represented to F. ‘‘Balance Herbicide Divestiture in Brazil, the research and development Plaintiff that they will later raise no Assets’’ means the following assets program for sugarbeets in Europe, and claim of hardship or difficulty as related to the Balance Herbicide the LibertyLink event in rice. grounds for failing to comply with their Business: H. ‘‘Broad Acre Seeds and Traits obligations under this Final Judgment or (1) all tangible assets used primarily Divestiture Assets’’ means the following for asking this Court to modify any of by or critical to the operation of the assets related to the Broad Acre Seeds the provisions contained below; Balance Herbicide Business, including, and Traits Business: NOW THEREFORE, before any but not limited to, all transferable (1) all tangible assets that comprise testimony is taken, without trial or licenses, permits, product registrations, the Broad Acre Seeds and Traits adjudication of any issue of fact or law, regulatory submissions, and Business, including, but not limited to, and upon consent of the parties, it is authorizations issued by or submitted to research and development activities; all ORDERED, ADJUDGED, AND any governmental organization; all manufacturing plants and equipment, DECREED: contracts, agreements, leases, tooling and fixed assets, personal commitments, certifications, and property, inventory, office furniture, I. JURISDICTION understandings, including supply materials, supplies, and other tangible This Court has jurisdiction over the agreements; and all customer lists, property; all transferable licenses, subject matter of and each of the parties accounts, credit records, and permits, product registrations and hereto with respect to this action. The transferable customer contracts; regulatory submissions (including Complaint states a claim upon which (2) all patents used by the Balance supporting data), certifications, and relief may be granted against Bayer and Herbicide Business; authorizations issued by or submitted to Monsanto under Section 7 of the (3) a worldwide, exclusive, royalty- any governmental organization; all Clayton Act, as amended (15 U.S.C. free, paid-up, irrevocable, perpetual contracts, teaming arrangements, § 18). Pursuant to the Stipulation and license to Bayer’s BALANCE trademark agreements, leases, commitments, Order filed simultaneously with this for marketing and selling isoxaflutole- certifications, and understandings, Final Judgment joining BASF as a based herbicides for use on crops that including supply agreements; all defendant to this action, BASF has are isoxaflutole-tolerant as a result of customer lists, accounts, credit records, consented to this Court’s exercise of genetic modification; and transferable customer contracts; all specific personal jurisdiction over BASF (4) a worldwide, non-exclusive, other business and administrative in this matter solely for the purposes of royalty-free, paid-up, irrevocable, records; all seed production facilities; settlement and for the entry and perpetual license (sub-licensable to any all breeding stations; all research and enforcement of the Final Judgment. tollers designated by BASF) to any development facilities; all germplasm; intellectual property, registration data, and all breeding data, including, but not II. DEFINITIONS technology, know-how, or other rights limited to, phenotype, genotype, As used in this Final Judgment: used in the manufacture or formulation molecular markers, and performance A. ‘‘Bayer’’ means Defendant Bayer of isoxaflutole-based herbicides for use data; AG, a German corporation with its on crops that are isoxaflutole-tolerant as (2) all intangible assets owned, headquarters in Leverkusen, Germany, a result of genetic modification; and licensed, controlled, or used by the its successors and assigns, and its (5) all other intangible assets owned, Broad Acre Seeds and Traits Business, subsidiaries, divisions, groups, licensed, controlled, or used primarily including, but not limited to, all patents,

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plant variety certificates, licenses and for canola/oilseed rape, potatoes, Business, including, but not limited to, sublicenses, intellectual property, sugarbeets, cereals, or vegetables. designs of experiments and the results copyrights, trademarks, trade names, J. ‘‘Collaboration’’ means an of successful and unsuccessful designs service marks, service names, technical agreement among non-affiliated firms and experiments. information, computer software and involving some sharing of resources, Notwithstanding Paragraphs II(L)(1) related documentation, know-how, management, or risk, including, but not and II(L)(2) above, the Digital trade secrets, drawings, blueprints, limited to, joint ventures or research Agriculture Divestiture Assets do not designs, design protocols, specifications alliances. For the avoidance of doubt, include trademarks, trade names, for materials, specifications for parts Collaboration for the purpose of this service marks, or service names and devices, safety procedures for the Final Judgment does not include (1) containing the name ‘‘Bayer.’’ handling of materials and substances, stand-alone intellectual property M. ‘‘Divestiture Assets’’ means: quality assurance and control licenses, including patent, trademark, (1) the Balance Herbicide Divestiture procedures, design tools and simulation software, know-how, variety, Assets; capability, manuals and technical germplasm, and registration data license (2) the Broad Acre Seeds and Traits information provided by Bayer to its agreements; (2) stand-alone crop Divestiture Assets; own employees, customers, suppliers, protection supply or tolling agreements; (3) the Digital Agriculture Divestiture agents, or licensees; and research data (3) cooperation agreements related to Assets; concerning historical and current advocacy and public policy issues; (4) (4) the Glufosinate Ammonium research and development efforts, agreements related to participation in Divestiture Assets; including, but not limited to, designs of industry groups and organizations; and (5) the Midwest Soybean Germplasm experiments and the results of (5) material transfer agreements. Divestiture Assets; (6) the Pipeline Herbicide Divestiture successful and unsuccessful designs and K. ‘‘Digital Agriculture Business’’ means Bayer’s global business of Assets; experiments; and (7) the Seed Treatment Divestiture (3) the copy of Bayer’s microbial researching, developing, manufacturing, and selling digital agriculture products. Assets; and strain collection (‘‘MSC’’) stored in L. ‘‘Digital Agriculture Divestiture (8) the Vegetable Seed Divestiture Morrisville, North Carolina, including, Assets’’ means the following assets Assets. but not limited to, all biological related to the Digital Agriculture N. ‘‘Divestiture Businesses’’ means the materials comprising the MSC and all Business: Balance Herbicide Business, the Broad documents, data, information, reference (1) all tangible assets that comprise Acre Seeds and Traits Business, the materials, and trade secrets related to the Digital Agriculture Business, Digital Agriculture Business, the the MSC, and (a) a worldwide, including, but not limited to, research Glufosinate Ammonium Business, the exclusive, royalty-free, paid-up, and development activities; all Pipeline Herbicide Business, the Seed irrevocable, perpetual license to use the manufacturing plants and equipment, Treatment Business, and the Vegetable MSC for trait research in any crop and tooling and fixed assets, personal Seed Business. (b) a worldwide, non-exclusive, royalty- property, inventory, office furniture, O. ‘‘Divestiture Closing Date’’ means free, paid-up, irrevocable, perpetual materials, supplies, and other tangible (1) with respect to assets, employees, license to use the MSC for any other property; all contracts, teaming and agreements related to all Divestiture agricultural use. arrangements, agreements, leases, Assets except the Vegetable Seed Notwithstanding Paragraphs II(H)(1) commitments, certifications, and Divestiture Assets, the date on which through II(H)(3) above, the Broad Acre understandings, including supply Bayer divests those Divestiture Assets to Seeds and Traits Divestiture Assets do agreements; all customer lists, accounts, BASF, and (2) with respect to assets, not include the facilities identified in credit records, and transferable employees, and agreements related to Appendix A, Paragraphs 1 and 2, or customer contracts; all other business the Vegetable Seed Divestiture Assets, trademarks, trade names, service marks, and administrative records; all research the date on which Bayer divests the or service names containing the name and development facilities; and Vegetable Seed Divestiture Assets to ‘‘Bayer.’’ (2) all intangible assets owned, BASF. I. ‘‘Clothianidin Seed Treatment licensed, controlled, or used by the P. ‘‘Fluopyram Seed Treatment Business’’ means Bayer’s global business Digital Agriculture Business, including, Business’’ means Bayer’s global business of researching, developing, but not limited to, all patents, licenses of researching, developing, manufacturing, and selling seed and sublicenses, intellectual property, manufacturing, and selling seed treatments containing clothianidin, copyrights, trademarks, trade names, treatments containing fluopyram. The Bacillus firmus strain I–1582, or service marks, service names, technical Fluopyram Seed Treatment Business Bacillus thuringiensis strain EX 297512. information, computer software and excludes Bayer’s business of The Clothianidin Seed Treatment related documentation, know-how, researching, developing, manufacturing, Business excludes Bayer’s business of trade secrets, drawings, blueprints, and selling cereals seed treatments manufacturing and selling seed designs, design protocols, specifications containing fluopyram, claiming only treatment mixture products containing for materials, specifications for parts fungicidal properties, and claiming no clothianidin for canola/oilseed rape, and devices, safety procedures for the nematode control effect. For the potatoes, sugarbeets, cereals, or handling of materials and substances, avoidance of doubt, this exclusion does vegetables that have been quality assurance and control not prevent BASF from researching, commercialized by Bayer as of the date procedures, design tools and simulation developing, manufacturing, and selling of filing of the Complaint in this matter capability, manuals and technical seed treatments for cereals containing (except Poncho/VOTiVO, Poncho Plus, information provided by Bayer to its fluopyram. and Poncho Super). For the avoidance own employees, customers, suppliers, Q. ‘‘Glufosinate Ammonium of doubt, these exclusions do not agents, or licensees; and research data Business’’ means Bayer’s global business prevent BASF from researching, concerning historical and current of researching, developing, developing, manufacturing, and selling research and development efforts manufacturing, and selling glufosinate seed treatments containing clothianidin related to the Digital Agriculture ammonium herbicide products.

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R. ‘‘Glufosinate Ammonium (7) all other intangible assets owned, developed by Monsanto that BASF Divestiture Assets’’ means the following licensed, controlled, or used primarily subsequently will choose pursuant to assets related to the Glufosinate by or critical to the operation of the the following process: Bayer will Ammonium Business: Glufosinate Ammonium Business, expeditiously provide BASF with access (1) Bayer’s glufosinate ammonium including, but not limited to, all (including to all supporting data) to all manufacturing facilities located in licenses and sublicenses, intellectual of the Monsanto Corn States lines (for Hurth/Knapsack, Germany; Muskegon, property, copyrights, trademarks, trade which Monsanto has the ability to offer Michigan; Mobile, Alabama; and names, service marks, service names, breeding rights) developed by Monsanto Frankfurt, Germany; Bayer’s glufosinate technical information, computer for each of the years 2019 and 2020. formulation facilities located in Regina, software and related documentation, BASF may choose two varieties for each Canada and Muskegon, Michigan; and know-how, trade secrets, drawings, of maturity zones zero through four, these facilities’ associated blueprints, designs, design protocols, resulting in a license for twenty (20) manufacturing equipment, tooling and specifications for materials, lines over the two (2) years; fixed assets, personal property, specifications for parts and devices, (3) all data (including, but not limited inventory, office furniture, materials, safety procedures for the handling of to, phenotype, genotype, molecular supplies, and other tangible property; materials and substances, quality markers, and performance data) related (2) all other tangible assets used assurance and control procedures, to the transferred populations or primarily by or critical to the operation design tools and simulation capability, licensed breeding varieties in Paragraph of the Glufosinate Ammonium Business, manuals and technical information II(S)(1) above for the purpose of including all contracts, teaming provided by Bayer to its own developing commercial soybean arrangements, agreements, leases, employees, customers, suppliers, agents, varieties; and a copy of all data commitments, certifications, and or licensees; and research data (including, but not limited to, understandings, including supply concerning historical and current phenotype, genotype, molecular agreements; all transferable licenses, research and development efforts, markers, and performance data) related permits, and authorizations issued by or including, but not limited to, designs of to the transferred populations or submitted to any governmental experiments and the results of licensed breeding varieties in Paragraph organization; all customer lists, successful and unsuccessful designs and II(S)(2) above for the purpose of accounts, credit records, and experiments; and developing commercial soybean transferable customer contracts; and all (8) a worldwide, non-exclusive, varieties; and other business and administrative royalty-free, paid-up, irrevocable, (4) all rights to develop commercial records; perpetual license to all other intellectual soybean varieties using the transferred (3) all patents used in the Glufosinate property (owned by Bayer or that Bayer populations or licensed breeding Ammonium Business, except for (a) has the right to license) that is used by varieties in Paragraphs II(S)(1) and patents related to the mixture or the Glufosinate Ammonium Business II(S)(2) above, which rights shall not be combined or sequential use of and not addressed earlier in Paragraph limited other than requiring compliance glufosinate ammonium with other active II.R, including, but not limited to, all with trait license agreements for any ingredients (‘‘Glufosinate Mixture and copyrights, trademarks, trade names, Monsanto traits remaining in any Use Patents’’) and (b) patents related to service marks, service names, and trade developed line. the use of glufosinate ammonium, alone secrets. Such license shall grant BASF T. ‘‘Pipeline Herbicide Business’’ or in mixtures, on plants containing the right to make, have made, use, sell means Bayer’s global business of genetically modified events developed or offer for sale, copy, create derivative researching, developing, and or to be developed by Bayer or works of, modify, improve, display, manufacturing ketoenole and N,O- Monsanto (‘‘Glufosinate Over-The-Top perform, and enhance the licensed Chelator (‘‘NOC’’) herbicides for non- Patents’’); intangible assets. Any improvements or selective uses. (4) a worldwide, exclusive, royalty- modifications to these intangible assets U. ‘‘Pipeline Herbicide Divestiture free, paid-up, irrevocable, perpetual developed by BASF shall be owned Assets’’ means the following assets license for all Glufosinate Mixture and solely by BASF. related to the Pipeline Herbicide Use Patents owned, controlled, licensed, Notwithstanding Paragraphs II(R)(1) Business: or used by Bayer or Monsanto with one through II(R)(8) above, the Glufosinate (1) a worldwide, exclusive, royalty- or more claims covering a BASF Ammonium Divestiture Assets do not free, paid-up, irrevocable, perpetual proprietary active ingredient; include the thirty (30) general office license in the field of non-selective uses (5) a worldwide, non-exclusive, facilities identified in Appendix A, for all Bayer intellectual property rights irrevocable, perpetual covenant not to Paragraph 1; the fourteen (14) and know-how related to Bayer’s assert against BASF or its direct or formulation and filling sites identified ketoenole and to Bayer’s NOC herbicide indirect customers all other Glufosinate in Appendix A, Paragraph 3; or candidates; Mixture and Use Patents owned, trademarks, trade names, service marks, (2) a worldwide, non-exclusive, controlled, licensed, or used by Bayer or or service names containing the name royalty-free, paid-up, irrevocable, Monsanto with one or more claims ‘‘Bayer.’’ perpetual license (sub-licensable to any covering any other active ingredient, S. ‘‘Midwest Soybean Germplasm tollers designated by BASF) to any except for any active ingredient itself Divestiture Assets’’ means the following intellectual property, registration data, covered by a Bayer or Monsanto patent, Monsanto assets: technology, know-how, or other rights during the life of that patent; (1) the four hundred and nineteen used in the manufacture or formulation (6) a worldwide, non-exclusive, (419) soybean populations identified in of ketoenole and of NOC herbicides for irrevocable, perpetual covenant not to Appendix B; non-selective uses; assert against BASF or its direct or (2) a worldwide, non-exclusive, (3) all data, documents, and know- indirect customers all current or future royalty-free, paid-up, irrevocable, how from in vitro assays related to the Glufosinate Over-The-Top Patents perpetual license for breeding purposes use of Bayer’s ketoenole and Bayer’s owned, controlled, licensed, or used by (subject to the limitations in Paragraph NOC herbicide candidates with Bayer’s Bayer or Monsanto; II(S)(4)) to twenty (20) soybean varieties relevant herbicide-tolerance traits;

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(4) all field trials conducted on Bacillus thuringiensis strain EX 297512 (10) all other intangible assets owned, Bayer’s ketoenole and Bayer’s NOC with any such other active ingredient(s) licensed, controlled, or used by the Seed herbicide candidates for non-selective for seed treatment uses; provided, Treatment Business, including, but not uses; however, that this license does not limited to, all licenses and sublicenses, (5) samples of all ketoenole and all include any right to make, sell, use, or intellectual property, copyrights, NOC herbicide molecules; and otherwise commercialize any active trademarks, trade names, service marks, (6) all data and information on the ingredient itself covered by a Bayer or service names, technical information, molecular structure and other Monsanto patent, during the life of that know-how, trade secrets, drawings, characteristics of Bayer’s ketoenole and patent; designs, design protocols, specifications Bayer’s NOC herbicide candidates. (5) a worldwide, exclusive, royalty- for materials, safety procedures for the V. ‘‘Relevant Personnel’’ means all free, paid-up, irrevocable, perpetual handling of materials and substances, Bayer employees who have supported or license for seed treatment uses to all quality assurance and control whose job related to the Divestiture patents used in Bayer’s current and procedures, design tools and simulation Businesses at any time between January pipeline ILeVO and COPeO seed capability, manuals and technical 1, 2015 and the Divestiture Closing treatments; provided, however, that this information provided by Bayer to its Date. license will be non-exclusive for cereals own employees, customers, suppliers, W. ‘‘Seed Treatment Business’’ means seed treatments containing fluopyram, agents, or licensees, and data the Clothianidin Seed Treatment claiming only fungicidal properties, and concerning historical and current Business, the Fluopyram Seed claiming no nematode control effect; research and development efforts, Treatment Business, and the ’839 (6) a worldwide, exclusive, royalty- including, but not limited to, designs of Business. experiments and the results of X. ‘‘Seed Treatment Divestiture free, paid-up, irrevocable, perpetual license to any other patent with one or successful and unsuccessful designs and Assets’’ means the following assets experiments. related to the Seed Treatment Business: more claims covering the combination of fluopyram with another active Notwithstanding Paragraphs II(X)(1) (1) Bayer’s Seed Growth Center through II(X)(10) above, the Seed located in Research Triangle Park, North ingredient, for BASF to combine fluopyram with any such other active Treatment Divestiture Assets do not Carolina, including all equipment, include (a) active ingredient production tooling and fixed assets, personal ingredient(s) for seed treatment uses; provided, however, that (a) this license facilities in Dormagen, Germany; property, inventory, office furniture, Bergkamen, Germany; or Tlaxcala, materials, supplies, and other tangible will be non-exclusive for cereals seed treatments containing fluopyram, Mexico; (b) formulation, filling, or property at this facility; packaging sites in Amatitlan, claiming only fungicidal properties, and (2) all other tangible assets used Guatemala; Belford Roxo, Brazil; claiming no nematode control effect; primarily by or critical to the operation Frankfurt, Germany; Kansas City, and (b) this license does not include any of the Seed Treatment Business, Missouri; Pinkenba, Australia; or Zarate, right to make, sell, use, or otherwise including, but not limited to, all Argentina; or (c) trademarks, trade commercialize any active ingredient transferable licenses, permits, names, service marks, or service names itself covered by a Bayer or Monsanto certifications, product registrations, containing the name ‘‘Bayer.’’ regulatory submissions, and patent, during the life of that patent; Y. ‘‘Shared Confidential Information’’ authorizations issued by or submitted to (7) all patents used exclusively in the means confidential business any governmental organization; all ’839 Business, and a worldwide, information relayed from Bayer to contracts, teaming arrangements, exclusive, royalty-free, paid-up, BASF, or vice versa, as a result of any agreements, commitments, irrevocable, perpetual license to all agreements entered into pursuant to certifications, and understandings, other patents with one or more claims Paragraph IV(G) or Paragraph IV(H) of including supply agreements; all used in the ’839 Business; this Final Judgment, including customer lists, accounts, credit records, (8) a worldwide, non-exclusive, quantities, units, and prices of items and transferable customer contracts; all irrevocable, perpetual covenant not to ordered or purchased, and any other sales and marketing assets, including, assert against BASF and its direct or competitively sensitive information but not limited to, distribution plans indirect customers all other patents regarding Bayer’s or BASF’s and any market research conducted; all owned, controlled, licensed, or used by performance under these agreements. other business and administrative Bayer or Monsanto with claims covering Z. ‘‘Vegetable Seed Business’’ means records; samples of all molecules; all the mixture or combined or sequential Bayer’s global business of researching, information on the molecular structure use of clothianidin, Bacillus firmus developing, manufacturing, and selling and other characteristics of the strain I–1582, Bacillus thuringiensis vegetable seeds. products; and all internal and available strain EX 297512, fluopyram, or BCS– AA. ‘‘Vegetable Seed Divestiture external studies; CT12839 with any active ingredient or Assets’’ means the following assets (3) all patents used in Bayer’s current combination of active ingredients, related to the Vegetable Seed Business: and pipeline Poncho, Poncho Plus, except for any active ingredient itself (1) all tangible assets that comprise Poncho Super, Poncho/VOTiVO, covered by a Bayer or Monsanto patent, the Vegetable Seed Business including, Poncho/VOTiVO 2.0, VOTiVO, VOTiVO during the life of that patent; but not limited to, research and 2.0, and TWO.0 seed treatments; (9) a worldwide, non-exclusive, development activities; all (4) a worldwide, exclusive, royalty- royalty-free, paid-up, irrevocable, manufacturing plants and equipment, free, paid-up, irrevocable, perpetual perpetual license (sub-licensable to any tooling and fixed assets, personal license to any other patent with one or tollers designated by BASF) to any other property, inventory, office furniture, more claims covering the combination intellectual property, registration data, materials, supplies, and other tangible of clothianidin, Bacillus firmus strain I– technology, know-how, or other rights property; all transferable licenses, 1582, or Bacillus thuringiensis strain EX used in the manufacture or formulation permits, product registrations and 297512 with another active ingredient, of any current or pipeline product regulatory submissions (including for BASF to combine clothianidin, divested as part of the Seed Treatment supporting data), certifications, and Bacillus firmus strain I–1582, or Business; and authorizations issued by or submitted to

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any governmental organization; all this matter or ninety (90) calendar days relevant certifications, job performance contracts, teaming arrangements, after receiving all international antitrust evaluations, and current salary and agreements, leases, commitments, approvals required for the transfer of the benefits information to enable BASF to certifications, and understandings, Divestiture Assets, Bayer and Monsanto make offers of employment. If Bayer is including supply agreements; all are ordered and directed to divest the barred by any applicable laws from customer lists, accounts, credit records, Divestiture Assets to BASF in a manner providing any of this information to and transferable customer contracts; all consistent with this Final Judgment. BASF, within ten (10) business days of other business and administrative The United States, in its sole discretion, receiving BASF’s request, Bayer shall records; seed production facilities; may agree to one or more extensions of provide the requested information to the breeding stations; all research and this period not to exceed sixty (60) greatest extent possible under development facilities; all germplasm; calendar days in total and shall notify applicable laws and also provide a and all breeding data, including, but not this Court in such circumstances. written explanation of its inability to limited to, phenotype, genotype, Defendants agree to use their best efforts comply fully with BASF’s request for molecular markers, and performance to divest the Divestiture Assets as information regarding Relevant data; and expeditiously as possible. Personnel. (2) all intangible assets owned, B. Bayer shall permit BASF to have (2) Upon request, Bayer shall make licensed, controlled, or used by the reasonable access to personnel and to Relevant Personnel available for Vegetable Seed Business, including, but make inspections of the facilities to be interviews with BASF during normal not limited to, all patents, plant variety acquired by BASF; access to any and all business hours at a mutually agreeable certificates, licenses and sublicenses, environmental, zoning, and other permit location. Bayer will not interfere with intellectual property, copyrights, documents and information; and access any negotiations by BASF to employ trademarks, trade names, service marks, to any and all financial, operational, or any Relevant Personnel. Interference service names, technical information, other documents and information includes but is not limited to offering to computer software and related customarily provided as part of a due increase the salary or benefits of documentation, know-how, trade diligence process. Relevant Personnel other than as part of secrets, drawings, blueprints, designs, C. Bayer and Monsanto shall not take a company-wide increase in salary or design protocols, specifications for any action that will impede in any way benefits granted in the ordinary course materials, specifications for parts and the permitting, operation, or divestiture of business. devices, safety procedures for the of the Divestiture Assets. (3) For any Relevant Personnel who handling of materials and substances, D. Unless the United States otherwise elect employment with BASF, Bayer quality assurance and control consents in writing, the divestitures shall waive all non-compete and non- procedures, design tools and simulation pursuant to Section IV of this Final disclosure agreements (except as noted capability, manuals and technical Judgment shall include the entire in Paragraph IV(E)(5)), vest all unvested information provided by Bayer to its Divestiture Assets and shall be pension and other equity rights, and own employees, customers, suppliers, accomplished in such a way as to satisfy provide all benefits which Relevant agents, or licensees; and research data the United States, in its sole discretion, Personnel would be provided if concerning historical and current that the Divestiture Assets can and will transferred to a buyer of an ongoing research and development efforts, be used by BASF as part of the viable, business. including, but not limited to, designs of ongoing operation of the Divestiture (4) For a period of two (2) years from experiments and the results of Businesses. The divestitures shall be the date of filing of the Complaint in successful and unsuccessful designs and accomplished so as to satisfy the United this matter, Bayer may not solicit to experiments. States, in its sole discretion, that none hire, or hire, any such person who was Notwithstanding Paragraphs II(AA)(1) of the terms of any agreement between hired by BASF, unless (a) such and II(AA)(2) above, the Vegetable Seed BASF and Bayer and Monsanto give individual is terminated or laid off by Divestiture Assets do not include the Bayer and Monsanto the ability BASF or (b) BASF agrees in writing that thirty-four (34) office facilities identified unreasonably to raise BASF’s costs, to Bayer may solicit or hire that in Appendix A, Paragraph 4, or lower BASF’s efficiency, or otherwise to individual. trademarks, trade names, service marks, interfere in the ability of BASF to (5) Nothing in Paragraph IV(E) shall or service names containing the name compete effectively. prohibit Bayer from maintaining any ‘‘Bayer.’’ E. Employees reasonable restrictions on the disclosure BB. ‘‘Yield and Stress Collaboration’’ (1) Within ten (10) business days by any employee who accepts an offer means any agreement between following the filing of the Complaint in of employment with BASF of Bayer’s Monsanto and BASF existing as of the this matter, Bayer shall provide to proprietary non-public information that date of filing of the Complaint in this BASF, the United States, and the is (a) not otherwise required to be matter related to a collaboration to Monitoring Trustee, organization charts disclosed by this Final Judgment, (b) develop yield and stress traits for row covering every person providing any related solely to Bayer’s businesses and crops. support for the Divestiture Businesses clients, and (c) unrelated to the for each year since January 1, 2015. Divestiture Assets. III. APPLICABILITY Within ten (10) business days of (6) BASF’s right to hire Relevant This Final Judgment applies to receiving a request from BASF, Bayer Personnel pursuant to Section IV(E) and Defendants and all other persons in shall provide to BASF, the United Bayer’s obligations under Paragraph active concert or participation with any States, and the Monitoring Trustee, IV(E)(1), Paragraph IV(E)(2), and of them who receive actual notice of this additional information related to Paragraph IV(E)(3) shall last for a period Final Judgment by personal service or identified Relevant Personnel, including of one (1) year after the Divestiture otherwise. name, job title, reporting relationships, Closing Date. Hay points, past experience, F. Asset Warranties IV. DIVESTITURES responsibilities from January 1, 2015 (1) In addition to any other warranties A. By the later of ninety (90) calendar through the Divestiture Closing Date, in the divestiture-related agreements days after the filing of the Complaint in training and educational history, entered into by Defendants, Bayer and

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Monsanto shall warrant to BASF (a) that conditions of any such agreement must option of BASF, on or before the each asset will be operational as of the be reasonably related to market Divestiture Closing Date, Bayer shall Divestiture Closing Date; (b) that, for conditions for the supply of seed enter into one or more tolling each of the Divestiture Assets, there are treatments. Upon BASF’s request, the agreements with BASF for the no material defects in the United States, in its sole discretion, may formulation, filling, and packaging of environmental, zoning, or other permits approve one or more extensions of any the seed treatments divested as part of pertaining to the operation of each asset; such agreement for a total of up to an the Clothianidin Seed Treatment (c) that following the sale of each of the additional two (2) years. The United Business and the Fluopyram Seed Divestiture Assets, Bayer will not States, in its sole discretion, shall Treatment Business for an initial period undertake, directly or indirectly, any determine whether supply pursuant to of up to two (2) years. Bayer will toll challenges to the environmental, zoning, any such extension must be at variable these products for BASF at variable cost, or other permits related to the operation cost. in priority over other purchasers, and in of each of the Divestiture Assets; and (d) (2) Isoxaflutole Supply Agreement: At the quantities demanded by BASF the Divestiture Assets are sufficient in the option of BASF, on or before the under any such agreement until the all material respects for BASF, taking Divestiture Closing Date, Bayer shall expiration of that agreement. All other into account BASF’s assets and enter into one or more agreements with terms and conditions of any such business, to maintain the viability and BASF for the supply of isoxaflutole to agreement must be reasonably related to competitiveness of the Divestiture be used on crops that are isoxaflutole- market conditions for the formulation, Businesses. tolerant as a result of genetic filling, and packaging of seed (2) In addition to any other remedial modification for an initial period of two treatments. Upon BASF’s request, the provisions in the divestiture-related (2) years. Bayer will supply BASF with United States, in its sole discretion, may agreements entered into by Defendants, formulated isoxaflutole and the approve one or more extensions of any for a period of up to one (1) year isoxaflutole active ingredient at variable such agreement for a total of up to an following the Divestiture Closing Date, cost, in priority over other purchasers, additional two (2) years. The United if BASF determines that any assets not and in the quantities demanded by States, in its sole discretion, shall included in the Divestiture Assets were BASF under any such agreement until determine whether tolling pursuant to previously used by the Divestiture the expiration of that agreement. All any such extension must be at variable Businesses and are reasonably necessary other terms and conditions of any such cost. for the continued competitiveness of the agreement must be reasonably related to (5) Clothianidin Active Ingredient Divestiture Businesses, it shall notify market conditions for the supply of Tolling Agreement: At the option of the United States, the Monitoring herbicides and the active ingredients in BASF, on or before the Divestiture Trustee, and Bayer in writing that it herbicides. Upon BASF’s request, the Closing Date, Bayer shall enter into one requires such assets. The United States, United States, in its sole discretion, may or more tolling agreements with BASF in its sole discretion, taking into approve one or more extensions of any for the supply of the active ingredients account BASF’s assets and business, such agreement for a total of up to an used in the seed treatments divested as shall determine whether any of the additional four (4) years. The United part of the Clothianidin Seed Treatment assets identified should be divested to States, in its sole discretion, shall Business for an initial period of up to BASF. If the United States determines determine whether supply pursuant to two (2) years. Bayer will toll these active that such assets should be divested, any such extension must be at variable ingredients for BASF at variable cost, in Bayer and BASF will negotiate an cost. priority over other purchasers, and in agreement within thirty (30) calendar (3) Tolling Agreement for Glufosinate the quantities demanded by BASF days providing for the divestiture of Ammonium: At the option of BASF, on under any such agreement until the such assets in a period to be determined or before the Divestiture Closing Date, expiration of that agreement. All other by the United States in consultation Bayer shall enter into one or more terms and conditions of any such with Bayer and BASF. The terms of any tolling agreements with BASF for the agreement must be reasonably related to such divestiture agreement shall be formulation, filling, and packaging of market conditions for the tolling of commercially reasonable and must be glufosinate ammonium products for an active ingredients used in seed acceptable to the United States, in its initial period of up to two (2) years. treatments. Upon BASF’s request, the sole discretion. Bayer will formulate, fill, and package United States, in its sole discretion, may G. Supply and Tolling Agreements glufosinate ammonium products for approve one or more extensions of any (1) Seed Treatment Supply BASF at variable cost, in priority over such agreement for a total of up to an Agreements for Broad Acre Seeds and other purchasers, and in the quantities additional four (4) years. The United Traits Business: At the option of BASF, demanded by BASF under any such States, in its sole discretion, shall on or before the Divestiture Closing agreement until the expiration of that determine whether tolling pursuant to Date, Bayer shall enter into one or more agreement. All other terms and any such extension must be at variable agreements with BASF for the supply of conditions of any such agreement must cost. the Bayer seed treatments (except the be reasonably related to market (6) Fluopyram Active Ingredient seed treatments divested as part of the conditions for the formulation, filling, Tolling Agreement: At the option of Clothianidin Seed Treatment Business and packaging of herbicides. Upon BASF, on or before the Divestiture or Fluopyram Seed Treatment Business) BASF’s request, the United States, in its Closing Date, Bayer shall enter into a used by Bayer in the Broad Acre Seeds sole discretion, may approve one or tolling agreement with BASF for the and Traits Business for an initial period more extensions of any such agreement supply of the fluopyram active of up to two (2) years. Bayer will supply for a total of up to an additional one (1) ingredient for an initial period of up to BASF with these seed treatments at year. The United States, in its sole two (2) years. Bayer will toll this active variable cost, in priority over other discretion, shall determine whether ingredient for BASF at variable cost, in purchasers, and in the quantities tolling pursuant to any such extension priority over other purchasers, and in demanded by BASF under any such must be at variable cost. the quantities demanded by BASF agreement until the expiration of that (4) Tolling Agreement for Divested under any such agreement until the agreement. All other terms and Seed Treatment Formulations: At the expiration of that agreement. All other

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terms and conditions of any such (1) Transition Services Agreements for to allow BASF to operate any agreement must be reasonably related to Information Technology Support: At the Divestiture Assets or to facilitate the market conditions for the tolling of option of BASF, on or before the transfer of Bayer facilities to BASF. active ingredients used in seed Divestiture Closing Date, Bayer shall Unless specifically excepted elsewhere treatments. Upon BASF’s request, the enter into one or more transition in this Final Judgment, Bayer will United States, in its sole discretion, may services agreements to provide provide transition services under any approve one or more extensions of any information technology services and such agreement for an initial period of such agreement for a total of up to an support for the Divestiture Assets for an up to two (2) years and on price terms additional four (4) years. The United initial period of up to one (1) year. no worse than at variable cost until the States, in its sole discretion, shall Bayer will provide the transition expiration of the agreement. All other determine whether tolling pursuant to services under any such agreement at no terms and conditions of any such any such extension must be at variable cost to BASF until the expiration of the agreement must be reasonably related to cost. agreement. All other terms and market conditions for the provision of (7) Reverse-Tolling Agreement for conditions of any such agreement must the relevant services. Upon BASF’s Bayer Products: At the option of Bayer, be reasonably related to market request, the United States, in its sole on or before the Divestiture Closing conditions for the provision of the discretion, may approve one or more Date, BASF shall enter into a reverse- relevant services. Upon BASF’s request, extensions of any such agreement for a tolling agreement with Bayer for the the United States, in its sole discretion, total of up to an additional one (1) year. formulation, filling, and packaging of may approve one or more extensions of (5) The terms and conditions of all the Bayer products manufactured at the this agreement for a total of up to an agreements reached between Bayer and Regina, Canada formulation facility that additional one (1) year. BASF under Paragraph IV(H) must be is part of the Glufosinate Ammonium (2) Bayer Warranty of Transition acceptable to the United States, in its Divestiture Assets for an initial period Services Provided by Tata Consultancy sole discretion. Any amendments or of up to two (2) years. All terms and Services: Bayer has contracted with a modifications of the agreements may be conditions of any such agreement must third-party vendor, Tata Consultancy entered into only with the approval of be reasonably related to market Services, to create interim, stand-alone the United States, in its sole discretion. conditions for the formulation, filling, information and business support Bayer shall perform all duties and and packaging of these crop protection systems for some components of the provide all services required of Bayer products. Upon Bayer’s request, the Divestiture Assets. Bayer shall warrant under the agreements reached between United States, in its sole discretion, may to BASF that the systems developed by Bayer and BASF under Paragraph IV(H). approve one or more extensions of such Tata Consultancy Services will be (6) BASF will use best efforts to agreement for a total of up to an operational on the Divestiture Closing develop alternative solutions by the end additional six (6) months. Date and support operations of the of the initial periods identified in (8) Other Supply and Tolling relevant components of the Divestiture Paragraph IV(H) for transition services Agreements: At the option of BASF, on Assets in a manner that is substantially agreements and will continue to use or before the Divestiture Closing Date, consistent with prior operations of these best efforts during any extension period. Bayer and BASF shall enter into any businesses. Except for de minimis (7) Bayer will use best efforts to other supply, reverse-supply, tolling, or deficiencies, Bayer shall use best efforts develop alternative solutions by the end reverse-tolling agreements reasonably to take all necessary actions to correct of the initial periods identified in necessary to allow BASF to operate any expeditiously any deficiencies Paragraph IV(H) for reverse-transition Divestiture Assets or to facilitate the inconsistent with this warranty and services agreements and will continue transfer of Bayer facilities to BASF. shall be solely responsible for all costs to use best efforts during any extension (9) The terms and conditions of all incurred in resolving the deficiencies, period. agreements reached between Bayer and including by paying Tata Consultancy I. Clothianidin Licenses Back: At the BASF under Paragraph IV(G) must be Services’s fees. option of Bayer, BASF shall enter into acceptable to the United States, in its (3) Distribution Agreements for an agreement to provide Bayer the sole discretion. Any amendment or Glufosinate Ammonium and Divested following licenses: modification of such agreements may be Seed Treatment Products: At the option (1) a worldwide, exclusive, royalty- entered into only with the approval of of BASF, on or before the Divestiture free, paid-up license to the rights the United States, in its sole discretion. Closing Date, Bayer shall enter into one transferred to BASF in Paragraph Bayer shall perform all duties and or more agreements to distribute on II(X)(3) for (a) all non-seed treatment provide all services required of Bayer BASF’s behalf products containing uses of clothianidin, (b) all uses of under the agreements reached between glufosinate ammonium, clothianidin, active ingredients other than Bayer and BASF under Paragraph IV(G). Bacillus firmus strain I–1582, or clothianidin, Bacillus firmus strain I– (10) BASF will use best efforts to fluopyram outside the United States. 1582, or Bacillus thuringiensis strain EX develop or procure alternative sources BASF shall terminate any such 297512, and (c) combinations of active of supply by the end of the initial agreement within one (1) year. Upon ingredients that do not include periods identified in Paragraph IV(G) for BASF’s request, the United States, in its clothianidin, Bacillus firmus strain I– supply and tolling agreements and will sole discretion, may approve one or 1582, or Bacillus thuringiensis strain EX continue to use best efforts during any more extensions of the period for BASF 297512; and extension period. to terminate any such agreement for a (2) a worldwide, non-exclusive, (11) Bayer will use best efforts to total of up to an additional one (1) year. royalty-free, paid-up license to the develop or procure alternative sources (4) Other Transition Services rights transferred to BASF in Paragraphs of supply by the end of the initial Agreements: At the option of BASF, on II(X)(3) and II(X)(4) for the use of periods identified in Paragraph IV(G) for or before the Divestiture Closing Date, clothianidin in any Bayer seed reverse-supply and reverse-tolling Bayer shall enter into other transition treatment mixture product for canola/ agreements and will continue to use services or reverse transition services oilseed rape, potatoes, sugarbeets, best efforts during any extension period. agreements to provide any other cereals, and vegetables that has been H. Transition Services transition services reasonably necessary commercialized by Bayer as of the date

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of the filing of the Complaint in this period, for a total of up to an additional such agreement reached between Bayer matter (except Poncho/VOTiVO, Poncho six (6) months, for BASF to satisfy this and BASF. Plus, and Poncho Super). requirement. BASF will make best V. FINANCING J. Digital Agriculture License Back: efforts to obtain such licenses, At the option of Bayer, BASF shall enter registrations, and permits as Neither Bayer nor Monsanto shall into an agreement to provide Bayer a expeditiously as possible. finance all or any part of any purchase non-exclusive, royalty-free, paid-up (2) Bayer will make best efforts to made pursuant to Section IV of this license to the Digital Agriculture assist BASF with acquiring new Final Judgment. Divestiture Assets for the limited licenses, registrations, and permits to VI. HOLD SEPARATE AND ASSET purpose of allowing Bayer to sell support the Divestiture Businesses and, PRESERVATION outside North America the following until BASF has the necessary licenses, digital agriculture products: Expert.com registrations, and permits, Bayer will Until all the divestitures required by web application; Weedscout mobile provide BASF with the benefit of this Final Judgment have been fully application; Xarvio FieldManager web Bayer’s licenses, registrations, and accomplished, Defendants shall take all application; Xarvio FieldManager permits in BASF’s operation of the steps necessary to comply with the mobile application; and Xarvio Scouting Divestiture Assets. Stipulation and Order entered by this mobile application. This license shall (3) Bayer will globally maintain all Court. Defendants shall take no action not give Bayer (1) any rights to any product registrations for isoxaflutole, that would jeopardize any divestiture improvements made by BASF to the fluopyram, and any other retained ordered by this Court. Digital Agriculture Divestiture Assets or product registrations related to the VII. AFFIDAVITS (2) any rights to use any trademarks or Divestiture Businesses, and Bayer will brand names divested as part of the make best efforts to obtain regulatory A. Within twenty (20) calendar days Digital Agriculture Divestiture Assets, approvals for isoxaflutole formulations of the filing of the Complaint in this including, but not limited to, used on isoxaflutole-tolerant cotton and matter, and every thirty (30) calendar Expert.com, Weedscout, or Xarvio. soybeans. days thereafter until the divestitures K. Third-Party Agreements: At BASF’s M. Modification of Monsanto-BASF have been accomplished under Section option, on or before the Divestiture Yield and Stress Collaboration: The IV, Bayer and Monsanto shall deliver to Closing Date, Bayer shall assign or Yield and Stress Collaboration will be the United States and the Monitoring otherwise transfer to BASF all modified consistent with the following: Trustee an affidavit, signed by each of transferable or assignable agreements, or (1) Defendants shall not contribute any Bayer’s and Monsanto’s Chief Financial any assignable portions thereof, related more genes to the Yield and Stress Officer and General Counsel, which to the Divestiture Assets, including, but Collaboration; (2) the Yield and Stress shall describe the fact and manner of not limited to, all customer contracts, Collaboration will continue as before Bayer’s and Monsanto’s compliance licenses, and collaborations. Bayer shall with respect to genes or events in the with Section IV. Assuming the use best efforts to expeditiously obtain three active research and development information set forth in the affidavit is from any third parties any consent projects, except that BASF will receive true and complete, any objection by the necessary to transfer or assign to BASF a license with stacking rights to use in United States to information provided all agreements related to the Divestiture its own seeds any Yield and Stress by Bayer and Monsanto, including Assets. To the extent consent cannot be Collaboration trait commercialized by limitation on information, shall be made obtained and the agreement is not Monsanto, on terms acceptable to the within fourteen (14) calendar days of otherwise assignable, in addition to the United States, in its sole discretion; (3) receipt of such affidavit. existing mitigation rules agreed upon both Bayer and BASF shall receive (a) B. Within twenty (20) calendar days between Bayer and BASF, Bayer shall copies of all other genes and related of the filing of the Complaint in this use best efforts to obtain for BASF, as research records in the Yield and Stress matter, each of the Defendants shall expeditiously as possible, the full Collaboration regardless of crop, and (b) deliver to the United States and the benefit of any such agreement as it non-exclusive research, development, Monitoring Trustee an affidavit that relates to the Divestiture Businesses by breeding, and commercialization rights describes in reasonable detail all actions assisting BASF to secure a new to these genes in any crop with no cost, it has taken and all steps it has agreement and by taking any other steps revenue, or profit sharing; and (4) the implemented on an ongoing basis to necessary to ensure that BASF obtains terms related to DroughtGard shall be comply with this Final Judgment and the full benefit of the agreement as it unchanged. the Stipulation and Order. Each of the relates to the Divestiture Businesses. N. Monsanto Midwest Soybean Defendants shall deliver to the United Bayer will not assert, directly or Germplasm: At the option of BASF, on States and the Monitoring Trustee an indirectly, any legal claim that would or before the Divestiture Closing Date, affidavit describing any changes to the interfere with BASF’s ability to obtain Bayer and Monsanto shall enter into one efforts and actions outlined in its earlier the full benefit from any transferred or more agreements facilitating the affidavits filed pursuant to this Final third-party agreement to the same extent transfer and licensing of the Midwest Judgment within fifteen (15) calendar enjoyed by Bayer prior to the transfer. Soybean Germplasm Divestiture Assets. days after the change is implemented. L. Licenses, Registrations, and The terms and conditions of any such C. In addition to providing affidavits Permits agreement reached between Bayer and to the United States and the Monitoring (1) Where necessary, BASF will apply Monsanto and BASF must be acceptable Trustee as required under Paragraph for licenses, registrations, and permits to the United States, in its sole VII(A) and Paragraph VII(B), Defendants that support the Divestiture Businesses discretion. Any amendment or shall immediately notify the United to replace those held by Bayer as modification of any such agreement may States and the Monitoring Trustee expeditiously as possible and, in any be entered into only with the approval verbally and in writing of any potential event, no later than six (6) months from of the United States, in its sole problems or delays in meeting any of the Divestiture Closing Date. The United discretion. Bayer and Monsanto shall the obligations set forth in this Final States, in its sole discretion, may perform all duties and provide all Judgment and the Stipulation and approve one or more extensions of this services required of them under any Order.

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D. Bayer and Monsanto shall keep all after the action taken by the Monitoring appropriate, this Court. To the extent records of all efforts made to preserve Trustee giving rise to the Defendants’ that any such report contains and divest each of the Divestiture Assets objection. information that the Monitoring Trustee until one year after such divestitures E. The Monitoring Trustee shall serve deems confidential, that report shall not have been completed. BASF shall keep at Bayer’s cost and expense pursuant to be filed in the public docket of this all records of all efforts made to acquire a written agreement with Bayer and on Court. each of the Divestiture Assets until one such terms and conditions as the United I. The Monitoring Trustee shall audit year after such divestitures have been States approves, in its sole discretion, Defendants’ compliance with Section IX completed. including confidentiality requirements every six (6) months. Defendants will and conflict of interest certifications. provide full access to any documents APPOINTMENT OF VIII. The compensation of the Monitoring and make employees available for MONITORING TRUSTEE Trustee and any consultants, interviews requested by the Monitoring A. Upon filing of this Final Judgment, accountants, attorneys, and other agents Trustee pursuant to performing the the United States may, in its sole retained by the Monitoring Trustee shall semi-annual audit. The Monitoring discretion, appoint a Monitoring be on reasonable and customary terms Trustee shall file a report of the audit Trustee, subject to approval by this commensurate with the individuals’ with the United States and, as Court. experience and responsibilities. If the appropriate, this Court. To the extent B. The Monitoring Trustee shall have Monitoring Trustee and Bayer are that any such report contains the power and authority to monitor unable to reach agreement on the information that the Monitoring Trustee Defendants’ compliance with the terms Monitoring Trustee’s or any agents’ or deems confidential, that report shall not of this Final Judgment and the consultants’ compensation or other be filed in the public docket of this Stipulation and Order entered by this terms and conditions of engagement Court. Court, and shall have such other powers within fourteen (14) calendar days of J. The Monitoring Trustee shall serve as this Court deems appropriate. The appointment of the Monitoring Trustee, until the sale of the Divestiture Assets Monitoring Trustee shall investigate and the United States may, in its sole is finalized pursuant to Section IV and report on Defendants’ compliance with discretion, take appropriate action, the expiration of any agreement entered their respective obligations under, and including making a recommendation to into pursuant to Paragraph IV(G) or efforts to effectuate the purposes of, this this Court. The Monitoring Trustee Paragraph IV(H) or other agreements Final Judgment and the Stipulation and shall, within three (3) business days of between Bayer and BASF that may Order, including, but not limited to, hiring any consultants, accountants, affect the accomplishment of the reviewing (1) the implementation and attorneys, or other agents, provide purposes of this Final Judgment, unless execution of the compliance plan written notice of such hiring and the the United States, in its sole discretion, required by Section IX, and (2) any rate of compensation to Bayer and the terminates earlier or extends this period. claimed breach by Bayer of any United States. K. If the United States determines that agreement entered into pursuant to F. The Monitoring Trustee shall have the Monitoring Trustee has ceased to act Paragraph IV(G) or Paragraph IV(H). If no responsibility or obligation for the or failed to act diligently or in a the Monitoring Trustee determines that operation of Defendants’ businesses. reasonably cost-effective manner, it may any violation of the Final Judgment or G. Defendants shall use their best recommend this Court appoint a the Stipulation and Order or breach of efforts to assist the Monitoring Trustee substitute Monitoring Trustee. any related agreement has occurred, the in monitoring Defendants’ compliance FIREWALL Monitoring Trustee shall recommend an with their individual obligations under IX. appropriate remedy to the United States, this Final Judgment and the Stipulation A. During the term of any agreement which, in its sole discretion, can accept, and Order. The Monitoring Trustee and entered into pursuant to Paragraph modify, or reject a recommendation to any consultants, accountants, attorneys, IV(G) or Paragraph IV(H), Bayer and pursue a remedy. and other agents retained by the BASF shall implement and maintain C. Subject to Paragraph VIII(E), the Monitoring Trustee shall have full and reasonable procedures to prevent Monitoring Trustee may hire at Bayer’s complete access to the personnel, books, Shared Confidential Information from cost and expense any consultants, records, and facilities related to being disclosed by or through accountants, attorneys, or other agents compliance with this Final Judgment implementation and execution of these reasonably necessary in the Monitoring and the Stipulation and Order, subject agreements to components or Trustee’s judgment and who shall be to reasonable protection for trade secret individuals within the respective solely accountable to the Monitoring or other confidential research, companies involved in the marketing, Trustee. Any such consultants, development, or commercial distribution, or sale of competing accountants, attorneys, or other agents information or any applicable products. shall serve on such terms and privileges. Defendants shall take no B. Bayer and BASF each shall, within conditions as the United States action to interfere with or to impede the twenty (20) business days of the entry approves, in its sole discretion, Monitoring Trustee’s accomplishment of of the Stipulation and Order, submit to including confidentiality requirements its responsibilities. the United States and the Monitoring and conflict of interest certifications. H. After its appointment, the Trustee a document setting forth in D. Defendants shall not object to Monitoring Trustee shall file reports detail the procedures implemented to actions taken by the Monitoring Trustee monthly until all the Divestiture Assets effect compliance with Section IX. Upon in fulfillment of the Monitoring have been divested and thereafter as receipt of the document, the United Trustee’s responsibilities under any frequently as the United States States shall notify Bayer and BASF order of this Court on any ground other determines, in its sole discretion, setting within twenty (20) business days than the Monitoring Trustee’s forth Defendants’ compliance with their whether, in its sole discretion, it malfeasance. Any such objections by obligations under this Final Judgment approves of or rejects each party’s Defendants must be conveyed in writing and under the Stipulation and Order. compliance plan. In the event that to the United States and the Monitoring The Monitoring Trustee shall file such Bayer’s or BASF’s compliance plan is Trustee within ten (10) calendar days reports with the United States and, as rejected, the United States shall provide

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Bayer or BASF, as applicable, the consultants and other persons retained IV(F)(2), BASF may not acquire from reasons for the rejection. Bayer or BASF, by the United States, shall, upon written Bayer during the term of this Final as applicable, shall be given the request of an authorized representative Judgment any assets or businesses that opportunity to submit, within ten (10) of the Assistant Attorney General in compete with the Divestiture Assets. In business days of receiving a notice of charge of the Antitrust Division, and on addition, Bayer and BASF shall not, rejection, a revised compliance plan. If reasonable notice to Defendants, be without the prior written consent of the Bayer or BASF cannot agree with the permitted: United States, enter into any new United States on a compliance plan, the (1) access during Defendants’ office hours to Collaboration involving any of the United States shall have the right to inspect and copy, or at the option of the Divestiture Assets or expand the scope request that this Court rule on whether United States, to require Defendants to of any existing Collaboration involving Bayer’s and BASF’s proposed provide hard copy or electronic copies of, any of the Divestiture Assets during the compliance plan fulfills the all books, ledgers, accounts, records, data, term of this Final Judgment. The United and documents in the possession, custody, requirements of Section IX. or control of Defendants, related to any States will notify Bayer and BASF of its C. Bayer and BASF shall: matters contained in this Final Judgment; decision within sixty (60) calendar days (1) furnish a copy of this Final and of receiving written notification from Judgment and related Competitive (2) to interview, either informally or on the Bayer and BASF of the proposed new or Impact Statement within sixty (60) record, Defendants’ officers, employees, or expanded Collaboration. The decision calendar days of entry of the Final agents, who may have their individual whether or not to consent to a Judgment to (a) each officer, director, counsel present, regarding such matters. Collaboration shall be within the sole and any other employee that will The interviews shall be subject to the discretion of the United States. receive Shared Confidential reasonable convenience of the interviewee Information; and (b) each officer, and without restraint or interference by XII. NOTIFICATION OF FUTURE director, and any other employee that is Defendants. TRANSACTIONS involved in (i) any contacts with the B. Upon the written request of an A. For transactions that are not other companies that are parties to any authorized representative of the subject to the reporting and waiting agreement entered into pursuant to Assistant Attorney General in charge of period requirements of the Hart-Scott- Paragraph IV(G) or Paragraph IV(H), or the Antitrust Division, Defendants shall Rodino Antitrust Improvements Act of (ii) making decisions under any submit written reports or responses to 1976, as amended, 15 U.S.C. § 18a (the agreement entered into pursuant to written interrogatories, under oath if ‘‘HSR Act’’), Bayer and Monsanto shall Paragraph IV(G) or Paragraph IV(H); requested, related to any of the matters not, without providing advanced (2) furnish a copy of this Final contained in this Final Judgment as may notification to the United States, Judgment and related Competitive be requested. directly or indirectly acquire a financial Impact Statement to any successor to a C. No information or documents interest, including through securities, person designated in Paragraph IX(C)(1) obtained by the means provided in loan, equity, or management interest, in upon assuming that position; Section X shall be divulged by the any company that researches, develops, (3) annually brief each person United States to any person other than manufactures, or sells digital agriculture designated in Paragraph IX(C)(1) and an authorized representative of the products or soybean, cotton, canola, or Paragraph IX(C)(2) on the meaning and executive branch of the United States, corn seeds or traits. In addition, Bayer requirements of this Final Judgment and except in the course of legal proceedings and Monsanto shall not acquire any the antitrust laws; and to which the United States is a party digital agriculture assets, any trait (4) obtain from each person (including grand jury proceedings), or assets, or all or substantially all of the designated in Paragraph IX(C)(1) and for the purpose of securing compliance germplasm assets from any such Paragraph IX(C)(2), within thirty (30) with this Final Judgment, or as company without providing advanced calendar days of that person’s receipt of otherwise required by law. notification to the United States. the Final Judgment, a certification that D. If at the time information or B. Such notification shall be provided he or she (a) has read and, to the best documents are furnished by Defendants to the United States in the same format of his or her ability, understands and to the United States, Defendants shall as, and per the instructions relating to, agrees to abide by the terms of this Final represent and identify in writing the the Notification and Report Form set Judgment; (b) is not aware of any material in any such information or forth in the Appendix to Part 803 of violation of the Final Judgment that has documents to which a claim of Title 16 of the Code of Federal not been reported to the company; and protection may be asserted under Rule Regulations as amended, except that the (c) understands that any person’s failure 26(c)(l)(G) of the Federal Rules of Civil information requested in Items 5 to comply with this Final Judgment may Procedure and mark each pertinent page through 8 of the instructions must be result in an enforcement action for civil of such material, ‘‘Subject to claim of provided only about digital agriculture or criminal contempt of court against protection under Rule 26(c)(l)(G) of the products or soybean, cotton, canola, or each Defendant or any person who Federal Rules of Civil Procedure,’’ then corn seeds or traits. Notification shall be violates this Final Judgment. the United States shall give Defendants provided at least thirty (30) calendar ten (10) calendar days’ notice prior to days prior to acquiring any such X. COMPLIANCE INSPECTION divulging such material in any legal interest, and shall include, beyond what A. For the purposes of determining or proceeding (other than a grand jury may be required by the applicable securing compliance with this Final proceeding). instructions, the names of the principal Judgment, or of any related orders such representatives of the parties to the as any Stipulation and Order, or of XI. NO REACQUISITION OR agreement who negotiated the determining whether the Final RECOMBINATION OF agreement, and any management or Judgment should be modified or DIVESTITURE ASSETS strategic plans discussing the proposed vacated, and subject to any legally Bayer may not reacquire any part of transaction. If within thirty (30) recognized privilege, from time to time the Divestiture Assets during the term of calendar days after notification, the authorized representatives of the United this Final Judgment. Except for an United States makes a written request States Department of Justice, including acquisition pursuant to Paragraph for additional information, Bayer and

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Monsanto shall not consummate the C. In any enforcement proceeding in Sanliurfa), Ukraine (Kiev), and the United proposed transaction or agreement until which the Court finds that the States (Champaign, Clayton, and Inaha). thirty (30) calendar days after Defendants have violated this Final 2. Bayer will retain one seed cleaning and submitting and certifying, in the manner Judgment, the United States may apply bagging facility that is part of Bayer Crop described in Part 803 of Title 16 of the to the Court for a one-time extension of Science headquarters in Monheim, Germany Code of Federal Regulations as this Final Judgment, together with such (known as ‘‘EOPC’’). amended, the truth, correctness, and other relief as may be appropriate. In 3. Bayer will retain fourteen (14) formulation completeness of all such additional connection with any successful effort by and filling sites largely dedicated to non- divested Bayer products in Argentina information. Early termination of the the United States to enforce this Final (Zarate), Australia (Kwinana and Pinkenba), waiting periods in this paragraph may Judgment against a Defendant, whether Brazil (Belford Roxo), China (Hangzhou), be requested and, where appropriate, litigated or resolved prior to litigation, Colombia (Barranquilla), Germany granted in the same manner as is that Defendant agrees to reimburse the (Frankfurt), Guatemala (Amatitla´n), Japan applicable under the requirements and United States for any attorneys’ fees, (Hofu), Korea (Daejeon), South Africa (Nigel), provisions of the HSR Act and rules experts’ fees, and costs incurred in Spain (Quart de Poblet), Thailand (Bangpoo), promulgated thereunder. Section XII connection with that enforcement effort, and the United States (Kansas City). shall be broadly construed and any including the investigation of the 4. Bayer will retain thirty-four (34) general ambiguity or uncertainty regarding the potential violation. office facilities largely dedicated to non- filing of notice under Section XII shall divested businesses in Algeria (Algiers), XV. EXPIRATION OF FINAL be resolved in favor of filing notice. Argentina (Munro), Australia (Pinkenba), JUDGMENT Belgium (Diegem), Canada (Guelph), Chile XIII. RETENTION OF (Santiago de Chile), Colombia (Bogota´), Costa JURISDICTION Unless this Court grants an extension, Rica (San Jose´), Denmark (Copenhagen), this Final Judgment shall expire ten (10) Egypt (Cairo), Germany (Monheim), Great This Court retains jurisdiction to years from the date of its entry, except Britain (Saffron Walden), Guatemala (Mixco), enable any party to this Final Judgment that after six (6) years from the date of Hungary (Budapest), Iran (Tehran), Japan to apply to this Court at any time for its entry, this Final Judgment may be (Fukuoka), Kazakhstan (Astana), Kenya further orders and directions as may be terminated upon notice by the United (Nairobi), Morocco (Casablanca and El Jadida), Panama (David), Peru (Ica and Lima), necessary or appropriate to carry out or States to the Court and Defendants that construe this Final Judgment, to modify Poland (Warsaw), Portugal (Carnaxide), the divestitures have been completed Romania (Bucharest), Russia (Krasnodar), any of its provisions, to enforce and that the continuation of the Final Singapore (Singapore), South Korea compliance, and to punish violations of Judgment no longer is necessary or in (Anseong-si), Spain (Paterna), Ukraine (Kiev), its provisions. the public interest. the United States (two sites in West Sacramento), and Vietnam (Hanoi). XIV. ENFORCEMENT OF FINAL XVI. PUBLIC INTEREST JUDGMENT DETERMINATION Appendix B: Monsanto Population Numbers (1) JVK13764 A. The United States retains and Entry of this Final Judgment is in the reserves all rights to enforce the (2) JVK13662 public interest. The parties have (3) JVK13647 provisions of this Final Judgment, complied with the requirements of the including its right to seek an order of (4) JVK13604 Antitrust Procedures and Penalties Act, (5) JVK13363 contempt from this Court. Defendants 15 U.S.C. § 16, including making copies (6) JVK13294 agree that in any civil contempt action, available to the public of this Final (7) JVK13624 any motion to show cause, or any Judgment, the Competitive Impact (8) JVK13564 similar action brought by the United Statement, and any comments thereon (9) JVK13301 States regarding an alleged violation of and the United States’ responses to (10) JVK13302 (11) JVK13304 this Final Judgment, the United States comments. Based upon the record may establish a violation of this Final (12) JVK13303 before this Court, which includes the (13) JVK13305 Judgment and the appropriateness of Competitive Impact Statement and any any remedy therefor by a preponderance (14) JVK13306 comments and responses to comments (15) JVK13307 of the evidence, and they waive any filed with this Court, entry of this Final (16) JVK13279 argument that a different standard of Judgment is in the public interest. (17) JVK13281 proof should apply. (18) JVK13282 B. The Final Judgment should be Date: (19) JVK13283 interpreted to give full effect to the [Court approval subject to procedures of (20) JVK13278 procompetitive purposes of the antitrust Antitrust Procedures and Penalties Act, 15 (21) JVK13280 U.S.C. § 16] laws and to restore all competition (22) JVK13284 (23) JVK13592 harmed by the challenged conduct. llllllllllllllllllll United States District Judge (24) JVK13593 Defendants agree that they may be held (25) JVK13596 in contempt of, and that the Court may Appendix A (26) JVK13591 enforce, any provision of this Final 1. Bayer will retain thirty (30) office facilities (27) JVK13594 Judgment that, as interpreted by the largely dedicated to non-divested Bayer (28) JVK13595 Court in light of these procompetitive businesses in Argentina (Buenos Aires and (29) JVK13598 principles and applying ordinary tools Chacabuco), Brazil (Paulinia), Canada (30) JVK13205 of interpretation, is stated specifically (Calgary, Ottawa, Rosthern, Saskatoon, and (31) JVK13224 and in reasonable detail, whether or not Winnipeg), Czech Republic (Prague), France (32) JVK13450 (two sites in Lyon), Germany (Langenfeld and (33) JVK13455 it is clear and unambiguous on its face. Monheim), Great Britain (Cambridge), Greece (34) JVK13457 In any such interpretation, the terms of (Athens and Thessaloniki), Hungary (35) JVK13458 the Final Judgment should not be (Budapest), Latvia (Riga), Poland (Warsaw), (36) JVK13251 construed against either party as the Romania (Bucharest), Russia (Moscow), (37) JVK13451 drafter. Turkey (Adana, Gebze, Istanbul, Izmir, and (38) JVK13452

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(39) JVK13453 (115) JVK13617 (191) JVK13767 (40) JVK13456 (116) JVK13618 (192) JVK13768 (41) JVK13761 (117) JVK13619 (193) JVK13751 (42) JVK13762 (118) JVK13692 (194) JVK13753 (43) JVK13763 (119) JVK13699 (195) JVK13754 (44) JVK13755 (120) JVK13207 (196) JVK13725 (45) JVK13756 (121) JVK13230 (197) JVK13726 (46) JVK13757 (122) JVK13259 (198) JVK13730 (47) JVK13758 (123) JVK13574 (199) JVK13731 (48) JVK13732 (124) JVK13576 (200) JVK13683 (49) JVK13733 (125) JVK13577 (201) JVK13688 (50) JVK13734 (126) JVK13578 (202) JVK13684 (51) JVK13735 (127) JVK13579 (203) JVK13685 (52) JVK13569 (128) JVK13582 (204) JVK13687 (53) JVK13570 (129) JVK13434 (205) JVK13689 (54) JVK13571 (130) JVK13428 (206) JVK13690 (55) JVK13572 (131) JVK13429 (207) JVK13691 (56) JVK13573 (132) JVK13430 (208) JVK13661 (57) JVK13446 (133) JVK13431 (209) JVK13664 (58) JVK13449 (134) JVK13432 (210) JVK13667 (59) JVK13153 (135) JVK13433 (211) JVK13668 (60) JVK13157 (136) JVK13435 (212) JVK13663 (61) JVK13176 (137) JVK13204 (213) JVK13150 (62) JVK13197 (138) JVK13216 (214) JVK13649 (63) JVK13209 (139) JVK13370 (215) JVK13650 (64) JVK13253 (140) JVK13371 (216) JVK13652 (65) JVK13272 (141) JVK13372 (217) JVK13653 (66) JVK13273 (142) JVK13373 (218) JVK13654 (67) JVK13274 (143) JVK13375 (219) JVK13655 (68) JVK13275 (144) JVK13376 (220) JVK13605 (69) JVK13276 (145) JVK13377 (221) JVK13606 (70) JVK13388 (146) JVK13378 (222) JVK13607 (71) JVK13389 (147) JVK13374 (223) JVK13608 (72) JVK13390 (148) JVK13504 (224) JVK13609 (73) JVK13391 (149) JVK13505 (225) JVK13610 (74) JVK13394 (150) JVK13506 (226) JVK13611 (75) JVK13387 (151) JVK13507 (227) JVK13551 (76) JVK13392 (152) JVK13508 (228) JVK13552 (77) JVK13393 (153) JVK13509 (229) JVK13554 (78) JVK13231 (154) JVK13510 (230) JVK13557 (79) JVK13669 (155) JVK13503 (231) JVK13553 (80) JVK13670 (156) JVK13702 (232) JVK13555 (81) JVK13675 (157) JVK13703 (233) JVK13556 (82) JVK13252 (158) JVK13700 (234) JVK13196 (83) JVK13673 (159) JVK13701 (235) JVK13542 (84) JVK13396 (160) JVK13707 (236) JVK13544 (85) JVK13397 (161) JVK13258 (237) JVK13547 (86) JVK13400 (162) JVK13459 (238) JVK13549 (87) JVK13395 (163) JVK13460 (239) JVK13550 (88) JVK13398 (164) JVK13461 (240) JVK13523 (89) JVK13401 (165) JVK13462 (241) JVK13524 (90) JVK13402 (166) JVK13463 (242) JVK13525 (91) JVK13379 (167) JVK13464 (243) JVK13526 (92) JVK13380 (168) JVK13465 (244) JVK13527 (93) JVK13382 (169) JVK13466 (245) JVK13528 (94) JVK13383 (170) JVK13257 (246) JVK13171 (95) JVK13384 (171) JVK13408 (247) JVK13180 (96) JVK13386 (172) JVK13410 (248) JVK13188 (97) JVK13385 (173) JVK13404 (249) JVK13211 (98) JVK13723 (174) JVK13405 (250) JVK13559 (99) JVK13721 (175) JVK13406 (251) JVK13560 (100) JVK13634 (176) JVK13407 (252) JVK13563 (101) JVK13635 (177) JVK13409 (253) JVK13529 (102) JVK13638 (178) JVK13353 (254) JVK13530 (103) JVK13639 (179) JVK13354 (255) JVK13531 (104) JVK13640 (180) JVK13355 (256) JVK13532 (105) JVK13641 (181) JVK13357 (257) JVK13499 (106) JVK13583 (182) JVK13356 (258) JVK13500 (107) JVK13584 (183) JVK13358 (259) JVK13501 (108) JVK13585 (184) JVK13359 (260) JVK13502 (109) JVK13586 (185) JVK13360 (261) JVK13471 (110) JVK13587 (186) JVK13710 (262) JVK13472 (111) JVK13588 (187) JVK13711 (263) JVK13473 (112) JVK13590 (188) JVK13715 (264) JVK13474 (113) JVK13612 (189) JVK13709 (265) JVK13476 (114) JVK13615 (190) JVK13713 (266) JVK13477

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(267) JVK13475 (343) JVK13743 (419) JVK13352 (268) JVK13478 (344) JVK13744 (269) JVK13416 (345) JVK13645 UNITED STATES DISTRICT COURT FOR (270) JVK13417 (346) JVK13646 THE DISTRICT OF COLUMBIA (271) JVK13420 (347) JVK13682 UNITED STATES DISTRICT COURT (272) JVK13421 (348) JVK13656 (273) JVK13418 (349) JVK13625 FOR THE DISTRICT OF COLUMBIA (274) JVK13419 (350) JVK13626 United States of America, Plaintiff, v. (275) JVK13422 (351) JVK13621 BAYER AG, MONSANTO COMPANY, and (276) JVK13423 (352) JVK13599 BASF SE, Defendants. (277) JVK13424 (353) JVK13600 (278) JVK13425 (354) JVK13602 Civil Action No.: 1:18–cv–1241 (279) JVK13426 (355) JVK13603 Judge James E. Boasberg (280) JVK13427 (356) JVK13566 (281) JVK13178 (357) JVK13567 COMPETITIVE IMPACT STATEMENT (282) JVK13182 (358) JVK13568 Pursuant to Section 2(b) of the (283) JVK13223 (359) JVK13533 (284) JVK13361 (360) JVK13534 Antitrust Procedures and Penalties Act (285) JVK13362 (361) JVK13535 (‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. (286) JVK13367 (362) JVK13536 § 16(b), Plaintiff United States of (287) JVK13369 (363) JVK13537 America files this Competitive Impact (288) JVK13364 (364) JVK13512 Statement relating to the proposed Final (289) JVK13366 (365) JVK13514 Judgment submitted on May 29, 2018, (290) JVK13323 (366) JVK13515 for entry in this civil antitrust (291) JVK13325 (367) JVK13513 proceeding. (292) JVK13327 (368) JVK13516 (293) JVK13330 (369) JVK13517 I. NATURE AND PURPOSE OF THE (294) JVK13326 (370) JVK13518 PROCEEDING (295) JVK13328 (371) JVK13519 (296) JVK13256 (372) JVK13520 On September 14, 2016, Defendant (297) JVK13331 (373) JVK13494 Bayer AG (‘‘Bayer’’) agreed to acquire (298) JVK13332 (374) JVK13495 Defendant Monsanto Company (299) JVK13333 (375) JVK13496 (300) JVK13335 (376) JVK13497 (‘‘Monsanto’’) in a merger valued at (301) JVK13336 (377) JVK13498 approximately $66 billion. The United (302) JVK13334 (378) JVK13490 States filed a civil antitrust Complaint (303) JVK13341 (379) JVK13491 against Bayer and Monsanto on May 29, (304) JVK13342 (380) JVK13492 2018, seeking to enjoin the proposed (305) JVK13308 (381) JVK13493 merger. The Complaint alleges that the (306) JVK13309 (382) JVK13467 proposed merger would lessen (307) JVK13310 (383) JVK13469 competition substantially across various (308) JVK13311 (384) JVK13479 markets in the agricultural industry, (309) JVK13312 (385) JVK13480 (310) JVK13158 (386) JVK13481 resulting in higher prices, less (311) JVK13295 (387) JVK13482 innovation, fewer choices, and lower- (312) JVK13297 (388) JVK13483 quality products for American farmers (313) JVK13298 (389) JVK13484 and consumers, in violation of Section (314) JVK13227 (390) JVK13486 7 of the Clayton Act, 15 U.S.C. § 18. (315) JVK13293 (391) JVK13487 Simultaneously with the filing of the (316) JVK13296 (392) JVK13488 (317) JVK13300 (393) JVK13411 Complaint, the United States has filed a (318) JVK13313 (394) JVK13412 proposed Final Judgment and a (319) JVK13314 (395) JVK13413 Stipulation and Order designed to (320) JVK13315 (396) JVK13414 prevent the merger’s likely (321) JVK13316 (397) JVK13415 anticompetitive effects. As detailed (322) JVK13155 (398) JVK13436 below, the proposed Final Judgment (323) JVK13174 (399) JVK13437 requires Bayer to divest its businesses (324) JVK13185 (400) JVK13438 that compete with Monsanto, the seed (325) JVK13199 (401) JVK13440 treatment businesses that the merged (326) JVK13203 (402) JVK13441 (327) JVK13225 (403) JVK13442 firm would use to harm competition in (328) JVK13320 (404) JVK13443 certain seed markets, and assets (329) JVK13321 (405) JVK13445 supporting those businesses (330) JVK13322 (406) JVK13194 (collectively, the ‘‘Divestiture Assets’’). (331) JVK13264 (407) JVK13254 Bayer has agreed to divest the (332) JVK13266 (408) JVK13348 Divestiture Assets to BASF SE (333) JVK13270 (409) JVK13540 (‘‘BASF’’), a global chemical company (334) JVK13271 (410) JVK13541 with a multi-billion-dollar crop (335) JVK13285 (411) JVK13629 protection business.1 The required (336) JVK13286 (412) JVK13630 (337) JVK13290 (413) JVK13632 divestitures will ensure that BASF (338) JVK13291 (414) JVK13633 replaces Bayer as an independent and (339) JVK13288 (415) JVK13344 vigorous competitor in each of the (340) JVK13746 (416) JVK13346 (341) JVK13747 (417) JVK13347 1 Bayer, Monsanto, and BASF are referred to (342) JVK13750 (418) JVK13349 collectively as ‘‘Defendants.’’

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markets in which the proposed merger B. The Competitive Effects of the leafy. In most cases, plant traits derive would otherwise lessen competition. Proposed Merger across Agricultural from the plant’s natural DNA; however, The terms of the Stipulation and Markets in the United States a small number of highly sophisticated Order require Defendants to take certain The Complaint alleges that the biotechnology firms can insert DNA steps to ensure that, pending the proposed merger would reduce from other organisms into the DNA of a required divestitures, all of the competition in the United States in 17 plant, giving the plant a desirable trait Divestiture Assets will be preserved and distinct agricultural product markets. associated with that non-native DNA. A GM seed is a seed that contains DNA, that Monsanto will continue to be These markets fit into four broad and hence a desirable trait, of a different operated independently as a separate categories: (1) genetically modified organism. Scientists have developed business concern. (‘‘GM’’) seeds and traits, (2) herbicide-tolerant traits that give crops The United States and Defendants foundational herbicides, (3) seed the ability to withstand exposure to have stipulated that the proposed Final treatments, and (4) vegetable seeds. In herbicides that would normally damage Judgment may be entered after addition to anticompetitive effects in or kill them, allowing a farmer to spray compliance with the APPA. Entry of the each of the product markets resulting the herbicide over an entire field and proposed Final Judgment would from the loss of head-to-head efficiently kill weeds without harming terminate this action, although the Court competition or vertical foreclosure, the the crop. Scientists also have developed would continue to retain jurisdiction to Complaint also alleges that the merger traits that make crops resistant to certain construe, modify, or enforce the would have a significant impact on insect pests, allowing farmers to prevent provisions of the proposed Final innovation. Without the merger, these pests from damaging their crops Judgment and to punish violations competition between Bayer and while also reducing farmers’ use of thereof. Monsanto would intensify as both chemical insecticides. Today, more than companies pursue what the industry II. DESCRIPTION OF THE EVENTS 90% of the soybeans, cotton, and canola refers to as ‘‘integrated solutions’’— GIVING RISE TO ALLEGED grown in the United States is grown combinations of seeds, traits, and crop VIOLATION from GM seeds. protection products, supported by A. The Defendants and the Merger digital farming technologies and other a) Relevant Markets services. Without the proposed Final Bayer is a life-sciences company As alleged in the Complaint, GM Judgment, that competition would be based in Leverkusen, Germany. The cotton seeds, GM canola seeds, and GM lost. company employs nearly 100,000 soybeans are each relevant product people worldwide and has operations in 1. GM Seeds and Traits markets under Section 7 of the Clayton nearly 80 countries. Bayer has three Act. In canola and soy, nearly all GM Bayer and Monsanto are close seeds contain herbicide-tolerant traits, main business lines: (1) competitors in the GM seeds and traits pharmaceuticals, (2) consumer health, but no seeds contain insect-resistant markets for three important U.S. row traits. In cotton, most GM seeds contain and (3) agriculture, the last of which is crops: cotton, canola, and soybeans. As the Bayer Crop Science division. Over both herbicide-tolerant traits and insect- described in the Complaint, the resistant traits (found on 98% and 88% the past decade, Bayer Crop Science has proposed merger would likely lead to a become one of the largest global of all cotton acres, respectively). The substantial lessening of competition in vast majority of farmers do not view agricultural firms. Today, its crop each of these markets, resulting in protection business is the second largest conventional (i.e., non-GM) seeds as a hundreds of millions of dollars in harm substitute for GM cotton, GM canola, or in the world, and its seeds and traits each year to American farmers and business is also among the world’s GM soybeans because GM seeds consumers. eliminate much of the labor and largest. Bayer Crop Science generated Cotton is a major crop grown across almost $12 billion in annual revenues in expense associated with more the southern United States. Cotton seeds traditional means of weed and pest 2017. are widely used in vegetable oil, management, offer higher yields, and Monsanto is a leading producer of packaged foods, and animal feed, and reduce soil erosion by decreasing tillage agricultural products based in St. Louis, cotton fibers are widely used in requirements. Accordingly, a Missouri. Over 20,000 people work for clothing. In 2017, U.S. farmers planted hypothetical monopolist of any of these the company in almost 70 countries. about 12 million acres of cotton GM seeds markets could profitably raise Monsanto’s innovative technologies accounting for over $800 million in seed prices. have established it as a global leader in purchases. The Complaint also alleges that agriculture; today, it is the leading Canola is an important crop used in insect-resistant traits for cotton and global producer of seeds and traits and vegetable oil, packaged foods, biodiesel herbicide-tolerant traits for cotton, is among the world’s largest producers fuels, and animal feed. In the United canola, and soybeans are relevant of crop protection products. In 2017, States, canola is grown on product markets under Section 7 of the Monsanto had almost $15 billion in approximately 1.7 million acres, mainly Clayton Act. Again, the vast majority of annual revenues. in North Dakota but also in several other farmers growing cotton, canola, and On September 14, 2016, Bayer agreed states. GM canola seeds accounted for soybeans in the United States choose to to acquire Monsanto for approximately $83 million in domestic sales in 2016. purchase GM seeds and do not consider $66 billion. In recognition of the Soy is the second-largest crop grown conventional seeds an acceptable significant competitive concerns raised in the United States. Soybeans are alternative. Consequently, GM traits are by the proposed merger, Bayer has widely used in vegetable oil, packaged necessary inputs for most seed agreed to divest agricultural assets foods, and animal feed. In 2017, U.S. companies, and a hypothetical valued at approximately $9 billion to farmers planted almost 90 million acres monopolist of any of the trait markets BASF. As discussed in Section III.K, of soybeans accounting for $4.64 billion listed above could profitably raise infra, BASF has agreed to be bound by in seed purchases. prices. the terms of the proposed Final A genetic trait is simply an attribute The Complaint alleges that the Judgment. of a plant, such as being tall, short, or relevant geographic markets for these

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GM seeds and traits markets are regional Even these figures significantly season and access to a deep and diverse because seeds are tailored to local understate the level of dominance the collection of high-quality seeds for growing conditions (such as weather merged company would have in each of breeding future varieties. The varieties and soil type), and suppliers can charge these markets. Monsanto licenses seeds must also be suitable for the particular different prices to customers in different with traits to certain smaller seed geographic region. Elite seed varieties regions. In cotton and canola, however, companies (referred to in the industry as suitable for regions in the United States virtually all of the regions affected by ‘‘independent seed companies’’), are increasingly difficult to procure and the merger have similar market leaving these smaller rivals with limited are controlled largely by a handful of conditions, so the regions can ability to exert competitive pressure on vertically integrated companies, reasonably be aggregated to a national the merged firm. including Monsanto, Bayer, DowDuPont, and Syngenta. In addition, level for purposes of analysis. For c) Competitive Effects—GM Traits soybeans, the market structure differs the time, expense, and expertise across regions, and the relevant In addition to effects in each GM seed required to commercialize a GM trait is geographic market in which the merger market, the proposed merger would prohibitive for all but these four will lead to harm is the southern United harm American farmers by eliminating companies. Although certain smaller States, where Bayer has focused its head-to-head competition between companies may participate in some soybean breeding program and been Bayer and Monsanto to develop and sell limited aspect of initially discovering a particularly successful. GM traits. These trait markets are even trait, they do not have the ability to more highly concentrated than the GM commercialize these traits. b) Competitive Effects—GM Seeds seed markets. Bayer and Monsanto The market for GM cotton seeds in the effectively have a duopoly in cotton 2. Foundational Herbicides United States is highly concentrated and herbicide-tolerant traits, and the In addition to competing to sell would become significantly more so if proposed merger would lead to a herbicide-tolerant seeds, Bayer and Bayer were allowed to acquire monopoly. In 2017, Bayer’s herbicide- Monsanto also compete to sell the Monsanto. Bayer and Monsanto have tolerant cotton traits accounted for 19% herbicides that are paired with them. long been the two leading suppliers of of the market, and Monsanto’s Monsanto’s Roundup Ready seeds are GM cotton seeds throughout the United accounted for 80%. The proposed engineered to tolerate the herbicide States. In addition to owning critical merger would also lead to a substantial glyphosate, which Monsanto sells under herbicide-tolerant and insect-resistant increase in concentration in the market its Roundup brands, while Bayer’s traits, discussed in more detail below, for canola herbicide-tolerant traits; LibertyLink seeds are engineered to the companies each own extensive virtually all canola seeds planted in the tolerate glufosinate ammonium, the libraries of elite seed varieties, which United States contain either a Bayer or herbicide that Bayer sells under the are essential for breeding and a Monsanto trait. In the soybean Liberty brand. These ‘‘foundational’’ commercializing competitive cotton herbicide-tolerant trait market, Bayer herbicides, glyphosate and glufosinate, seeds. If the proposed merger were has chipped away at Monsanto’s have unique characteristics that make allowed to proceed, Bayer and position, and the merger threatens to them important competitive alternatives Monsanto would have a combined 59% eliminate Monsanto’s only serious for farmers. share of GM cotton seeds in the United challenger. In 2017, Bayer and a) Relevant Market States. Monsanto represented 14% and 67% of In the market for GM canola seeds in the market, respectively, with the The Complaint alleges that the United States, Bayer and Monsanto remainder attributable to market foundational herbicides constitute a are by far the two largest competitors, participants using an off-patent version relevant product market under Section 7 with a combined share of approximately of Monsanto’s original Roundup Ready of the Clayton Act. Foundational 74%. Bayer and Monsanto compete trait. Finally, the merger would also herbicides are herbicides used on row aggressively, and Bayer’s canola significantly increase concentration in crops that have two defining innovations in recent years have the already highly concentrated market characteristics. First, they are ‘‘non- allowed it to surpass Monsanto, for insect-resistant traits for cotton; selective,’’ meaning that they kill all previously the largest firm in this Bayer and Monsanto accounted for 10% types of weeds, thus providing farmers market. and 75% of that market, respectively, in with the broadest possible protection for In the market for GM soybeans, the 2017. their crops. In contrast, other types of proposed merger would eliminate Bayer Without the merger, competition herbicides are ‘‘selective,’’ meaning that as a uniquely positioned challenger to between the two companies across the they kill only certain types of weeds. Monsanto, which has dominated the GM trait markets would likely increase Selective herbicides are often used to market since traits were first over time. Bayer and Monsanto each supplement non-selective herbicides but commercialized in soybeans in the have new traits in their research are not generally used in lieu of them. 1990s. For years, Monsanto’s pipelines that would confer tolerance to Second, foundational herbicides can be competitors relied on Monsanto for additional herbicides, and farmers paired with seeds that are engineered to licenses to GM traits and, in most cases, would benefit as Bayer and Monsanto tolerate the herbicide. Other non- for licenses to seed varieties as well. continued to develop these new selective herbicides are not a substitute Bayer, however, invested over $250 innovations. for farmers because no seeds are million to develop an independent engineered to withstand them, so source of soybean varieties and d) Entry and Expansion in GM spraying those herbicides over a crop launched its own branded soybean Seeds and Traits Markets would damage it. For these reasons, business, Credenz, which sells varieties Entry is unlikely to counteract the farmers have no good substitutes for that perform well in the southern anticompetitive effects of the proposed foundational herbicides, and a United States. In 2017, Monsanto had a merger in any of the GM seed or GM hypothetical monopolist would find it 39% market share in that region, with trait markets. To compete in a GM seed profitable to increase the price of some Bayer holding a 6% share that it market, a company must have high- foundational herbicides by a small but planned to grow in the future. quality varieties for the current growing significant amount. Today, glyphosate

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and glufosinate are the only two treatments are applied to the majority of most significant threat to Bayer’s foundational herbicides, but, as GM seeds sold in the United States dominance. discussed further below, new today. Multiple seed treatments can be b) Vertical Foreclosure—Seed foundational herbicides are in applied to a seed to protect it from Treatments for Corn Rootworm and development. various threats; seed treatments GM Corn Seeds designed for one purpose (e.g., killing b) Competitive Effects insects) are rarely an effective substitute Corn is the largest crop grown in the The proposed merger would combine for seed treatments designed for a United States, accounting for over $8 the world’s leading producers of different purpose (e.g., controlling billion in seed sales annually. Over 90% foundational herbicides and would lead fungal plant diseases). of U.S. corn seeds are genetically to a presumptively anticompetitive The Complaint alleges that the modified, and, like the other GM seeds increase in market concentration. Since proposed merger would likely result in discussed above, GM corn seeds are a the launch of herbicide-tolerant crops in three forms of competitive harm related relevant product market under Section 7 the 1990s, Monsanto’s Roundup has to seed treatments: (1) the loss of head- of the Clayton Act. Although Bayer does dominated the market. As some weeds to-head competition between Bayer’s not sell corn seeds, Monsanto effectively have developed resistance to and Monsanto’s seed treatments for controls 50% of the market and faces glyphosate, however, farmers are nematodes, (2) vertical foreclosure only one major rival. increasingly turning to Liberty. While effects resulting from the combination of Corn rootworm is a destructive pest glufosinate and glyphosate are now off Monsanto’s strong position in corn that can devastate a farmer’s fields. To patent, competition from generic seeds with Bayer’s substantial position deal with this threat, some farmers rely suppliers has not prevented Bayer and in insecticidal seed treatments for corn on Bayer’s Poncho insecticidal seed Monsanto from maintaining branded rootworm, and (3) vertical foreclosure treatment. For many farmers, there are price premiums. In 2017, Bayer held a effects resulting from the combination of no cost-effective alternatives to 7% share and Monsanto held a 53% Monsanto’s strong position in soybeans insecticidal seed treatments. Because share, with generic manufacturers with Bayer’s substantial position in Poncho is the only seed treatment that holding the remaining share. fungicidal seed treatments for soybean offers meaningful protection against The proposed merger is also likely to sudden death syndrome. corn rootworm, corn seed companies eliminate competition between Bayer purchase Bayer’s insecticidal seed a) Nematicidal Seed Treatments for and Monsanto to develop next- treatment to apply to their seeds so they Corn, Cotton, and Soybeans generation weed management systems. can offer a competitive product. The Complaint explains that Bayer is Nematicidal seed treatments protect The merger would likely harm developing new foundational herbicides crops from parasitic roundworms competition in the market for GM corn and related herbicide-tolerant traits that known as nematodes. Farmers have no seeds by combining Monsanto’s strong would rival Monsanto’s Roundup cost-effective alternatives to nematicidal position in GM corn seeds with Bayer’s Ready-based systems. Likewise, seed treatments. Seed treatments are dominant position in insecticidal seed Monsanto is actively pursuing approved for use by the government on treatments for corn rootworm. The innovations in foundational herbicides, a crop-by-crop basis, so a soybean merged firm would have the incentive including improvements to its Roundup farmer, for example, chooses between a and ability to make its corn seed rivals formulations. Absent the merger, Bayer different set of competitive alternatives less competitive by forcing them to pay and Monsanto would each have than a cotton farmer. Accordingly, the more for Poncho or cutting off their incentives to pursue these competing Complaint alleges that nematicidal seed supply of the product. This would limit pipeline products because any new treatments for corn, cotton, and soybean farmers’ choices, reduce competition, innovations developed would help win seeds are each relevant markets under and ultimately allow the merged firm to market share from the other. In contrast, Section 7 of the Clayton Act and that a increase the price for GM corn seeds. hypothetical monopolist in each market the merged firm will have different c) Vertical Foreclosure—Fungicidal incentives due to heightened concerns could profitably raise prices. All three nematicidal seed treatment Seed Treatments for Sudden Death that new innovations would simply Syndrome and GM Soybeans cannibalize sales. markets are highly concentrated. For years, Bayer has had a monopoly in the The merger is likely to have similar c) Entry and Expansion market for nematicidal seed treatments effects in soy. Sudden death syndrome As alleged in the Complaint, the for corn; in 2017, its market share was (‘‘SDS’’) is a fungal disease afflicting anticompetitive effects of the proposed over 95%. Bayer also dominates the millions of soybean acres across the merger would not be remedied by entry market for nematicidal seed treatments United States. In 2015, Bayer began or expansion in the foundational for soybeans, with a share over 85%. selling ILeVO, the only effective herbicide market. The manufacture of And in the market for nematicidal seed fungicidal seed treatment combatting foundational herbicides is complex and treatments for cotton, Bayer and SDS, and ILeVO’s sales have doubled hazardous, requiring regulatory and Syngenta currently split the market annually since its introduction. The safety approvals, which are expensive roughly evenly. merger is likely to reduce competition and time-consuming to secure. Although Monsanto does not by combining Monsanto’s leading GM Reputation, brand loyalty, and currently sell any nematicidal seed soybean business with Bayer’s dominant economies of scale also present barriers treatments, it is about to launch its first position in fungicidal seed treatments to entry and expansion. product, NemaStrike. Without the for SDS. The merged firm would have merger, both Bayer and Monsanto the incentive and ability to make its 3. Seed Treatments expected NemaStrike to capture soybean rivals less competitive by Seed treatments are coatings applied significant share from Bayer in all three charging them more for ILeVO or cutting to seeds that can protect the seed and seed treatment markets. The Complaint off their supply, diminishing the young plant from various insects or alleges that the proposed merger would competition in the market for GM diseases. Seed treatments are a critical harm competition in the nematicidal soybeans and reducing choices available tool for farmers, and one or more seed seed treatment market by removing the to farmers.

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d) Entry and Expansion country, geographic markets are BASF, a global chemical company with As alleged in the Complaint, the regional, but, similar to row crops, an existing agricultural crop protection anticompetitive effects of the proposed virtually all regions affected by the business. To ensure that BASF would merger would not be remedied by entry merger have similar market structure, so replace Bayer as an effective competitor or expansion in the relevant seed in this case it is appropriate to aggregate and innovator in each of the 17 markets these regions to the national level for in which the Complaint alleges that the treatment markets. Developing a new, convenience. proposed merger would harm effective seed treatment is a slow, competition, the United States carefully costly, and difficult process, and new b) Competitive Effects scrutinized the merging parties’ and seed treatments require extensive Bayer and Monsanto are among the BASF’s businesses and operations to regulatory approvals before farmers can largest domestic producers of all the identify a comprehensive package of use them. Generic versions of the Bayer vegetable seeds at issue. The Complaint businesses and supporting assets for seed treatments discussed above will alleges that the proposed merger would divestiture. Collectively, these transfers not be available for at least the next significantly increase concentration in encompass the suite of businesses and several years due to various intellectual each market, and each market would be assets that constitute the divestiture property protections. Neither expansion highly concentrated with few, if any, package. by existing seed treatments nor new other significant competitors. In carrots In evaluating the remedy, the United seed treatments expected to launch in and cucumbers, the merged firm would States recognized that fully preventing the next several years would prevent the enjoy near-complete dominance, with the competitive effects of a merger in anticompetitive effects of the proposed market shares of 94% and 90%, some cases requires the inclusion of merger. respectively. The combined company assets or projects that are beyond the 4. Vegetables would also have high market shares in affected relevant markets. As the U.S. onion seeds (71%) and tomato seeds Department of Justice Antitrust Division Finally, the Complaint alleges that the (55%). In watermelon seeds, Bayer Policy Guide to Merger Remedies proposed merger is likely to holds a 37% market share while explains, the United States will exercise substantially lessen competition in the Monsanto has a 6% share, with only one its enforcement discretion to accept a markets for five types of vegetable seeds: other significant competitor. Monsanto’s divestiture only when it is persuaded carrots, cucumbers, onions, tomatoes, market share in watermelon seeds that the divested ‘‘assets will create a and watermelons. Overall, Monsanto is understates its competitive significance; viable entity that will effectively the largest global vegetable seed its recent introduction of competitive preserve competition.’’ See Antitrust company, while Bayer is the fourth seedless watermelon varieties, which Division Policy Guide to Merger largest, and the two companies are are in high demand and already offered Remedies at 9 (June 2011) (available at strong competitors in all five of these by Monsanto’s competitors, will likely https://www.justice.gov/atr/public/ markets. significantly improve its position going guidelines/272350.pdf). Because Bayer a) Relevant Markets forward. In each of these markets, the does not operate its businesses that proposed merger would eliminate the compete with Monsanto as separate, The Complaint alleges that the seeds significant competition between Bayer standalone entities, to ensure effective markets for carrots, cucumbers, onions, and Monsanto, not only on price, but relief the United States is also requiring tomatoes, and watermelons each also on quality and innovation, to the the divestiture of assets that are constitute a relevant market under overall detriment of American farmers complementary to the competitive Section 7 of the Clayton Act. Each and consumers. products or that use shared resources. vegetable species has unique See id. at 11 (‘‘[I]ntegrated firms can c) Entry and Expansion characteristics, and other crops are not provide scale and scope economies that viable substitutes. Many vegetable seed Firms that sell vegetable seeds use a purchaser may not be able to achieve customers rely on access to particular modern breeding techniques that by obtaining only those assets related to types of vegetables to operate their require access to advanced technologies the relevant product(s).’’). Finally, businesses. For example, in the United and elite seed varieties, making entry effective relief also requires divestiture States, companies that sell pre-cut baby challenging. In addition, entering a new of those ‘‘pipeline’’ research projects carrots and other carrot products, such vegetable seed market can be expensive that Bayer is pursuing to ensure the as juice, purchase carrot seeds to grow and time consuming because successful future competitive significance of the their carrots. These companies are vegetable seed companies must invest divested businesses. unlikely to begin growing a different continuously in developing new, Guided by these principles, the crop in large quantities in response to a improved varieties, some of which can United States identified a divestiture price increase. Nor are other farmers take over a decade to breed and package that remedies the various likely to switch crops in response to a commercialize. Certain vegetable dimensions of harm threatened by the price increase because they have markets present additional unique proposed merger. First, the proposed invested in crop-specific facilities and challenges; for instance, onions are Final Judgment requires Bayer to divest equipment, possess specialized crop- among the hardest vegetable seeds to those businesses that vigorously specific knowledge, or live in an area produce, in part, because they are compete head-to-head with Monsanto best suited to growing that particular biennials, generating seed only every today. Second, to address certain type of vegetable. A hypothetical other growing season. vertical concerns, the proposed Final monopolist of any of the five vegetable Judgment requires Bayer to divest seed seed species would find it profitable to III. EXPLANATION OF THE treatment businesses that would give increase prices by at least a small but PROPOSED FINAL JUDGMENT the combined company the incentive significant amount because the bulk of The proposed Final Judgment and ability to harm competition by farmers would not switch away from remedies the anticompetitive effects of raising the prices it charges rival seed their preferred vegetable crops in the merger by requiring Bayer to divest companies. Third, because Bayer and response. As vegetable seeds are bred to its businesses in each relevant market, Monsanto compete to develop new thrive in particular regions of the along with various supporting assets, to products and services for farmers, the

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proposed Final Judgment requires the oversight over the divestitures to ensure competitiveness of those businesses as divestiture of associated intellectual they proceed efficiently (see, infra, they are transitioned from Bayer. property and research capabilities, Section III.H). And, as additional First, the proposed Final Judgment including ‘‘pipeline’’ projects, to enable protection, the proposed Final Judgment requires divestiture of Bayer’s R&D BASF to replace Bayer as a leading includes robust mechanisms that will programs associated with wheat. Bayer innovator in the relevant markets. allow the United States and the Court to does not currently sell wheat in the Fourth, the proposed Final Judgment monitor the effectiveness of the relief United States, but it has been pursuing requires the divestiture of additional and to enforce compliance. wheat-related research to expand the assets that will give BASF the scale and scope of its global seeds and traits A. GM Seeds and Traits scope to compete effectively today and portfolio and sustain the level of R&D in the future. Section IV of the proposed Final investment these businesses require. Because many of the divested assets Judgment requires Bayer to divest all Because seed and trait innovations can will be separated from Bayer’s existing assets used by Bayer’s GM seeds and often be applied across multiple crops, business units and incorporated into traits businesses in the United States, a broader seed and trait portfolio will BASF, the proposed Final Judgment including Bayer’s cotton, canola, and provide the promise of higher returns on includes provisions aimed at ensuring soybean seeds and traits businesses, as investment and increase the incentive to that the assets are handed off in a well as almost all of the assets innovate. The proposed Final Judgment seamless and efficient manner. To that associated with Bayer’s other global GM preserves the scope efficiencies that end, Bayer is required to transfer seeds and traits businesses. Because Bayer enjoys today by keeping these existing third-party agreements and Bayer and Monsanto are currently businesses together. Moreover, customer information to BASF, as well competing to introduce the next separating the wheat business from as to enter transition services blockbuster trait or plant variety, BASF Bayer’s other seeds and traits businesses agreements that ensure that BASF can can replace Bayer as a competitor only would have required disentangling and continue to serve customers if BASF obtains all the assets required dividing integrated operations and immediately upon completion of the to continue Bayer’s legacy of assets. For instance, Bayer’s research divestitures. The transition services and innovation. This includes all assets facility in Ghent, Belgium is used to interim supply agreements are time- needed to offer farmers the new support R&D for wheat as well as other limited to ensure that BASF will products that Bayer was poised to crops. By requiring the divestiture of become fully independent of Bayer as commercialize in the coming years. Bayer’s wheat R&D programs and soon as practicable. The proposed Final Notably, BASF will receive all of related facilities, the proposed Final Judgment also requires Bayer to warrant Bayer’s trait research centers (including Judgment ensures that BASF has all of that the assets being divested are facilities in Morrisville, North Carolina; the tools needed to run the divested sufficient for BASF to maintain the Ghent, Belgium; and Astene, Belgium). businesses and can leverage these viability and competitiveness of the The proposed Final Judgment also common resources as effectively as divested businesses following BASF’s requires Bayer to transfer all intangible Bayer does today. acquisition of the assets. In addition, it assets used by these businesses, such as Second, under Paragraph IV.G of the gives BASF a one-year window after patents, know-how, and licenses or proposed Final Judgment, Bayer will closing to identify any additional assets permits issued by government agencies. supply BASF with the seed treatments that are reasonably necessary to ensure There are limited exceptions to Bayer currently applies to its row crop the continued competitiveness of the Bayer’s obligation to divest all of the seeds for a period of up to two years, divested businesses. The United States assets used by its global GM seeds and with extensions subject to approval by will have the sole discretion to traits businesses. Certain assets used the United States. This will allow BASF determine if Bayer must divest these exclusively to support a handful of to offer farmers the same combinations additional assets. Finally, the proposed Bayer’s small seed businesses or of seeds and seed treatments that Bayer Final Judgment gives BASF the ability research programs outside of the United offers today without interruption. to hire all of the personnel from Bayer States are excluded from the Divestiture During the term of these supply needed to support these businesses. Assets. These exceptions are related to agreements, BASF will transition to BASF is the only buyer the United (1) rice seed, which Bayer sells only in using (1) its own seed treatments, (2) the States has evaluated and deemed Asia; (2) Bayer’s millet, mustard, and seed treatments it is acquiring from suitable to resolve the range of cotton seed businesses in India; (3) R&D Bayer pursuant to the proposed Final competitive concerns raised by the programs for Brazilian sugarcane and Judgment (discussed in more detail merger. BASF already has extensive European sugarbeets; and (4) Bayer’s below), (3) seed treatments from agricultural experience, but it lacks a cotton seed business in South Africa. alternate suppliers, or (4) a combination seeds and traits business. Combining the None of these is closely related to the thereof. businesses and assets being divested divested U.S. seeds and traits Third, Paragraph IV.N of the proposed with BASF’s existing portfolio will businesses. Bayer will also retain a Final Judgment requires Bayer to divest allow it to become an integrated player number of general office facilities that certain groups of Monsanto soybeans and an effective industry competitor to house employees of businesses not used for research and breeding (referred the merged company and the other affected by the divestitures, as well as to in the industry as ‘‘germplasm’’). As integrated players. BASF will have full one seed cleaning and bagging facility in discussed in the Complaint, Bayer has control over these divested businesses, Germany that is part of Bayer’s Crop aggressively challenged Monsanto in the including the ability to assign licenses Science headquarters. soybean market, and planned to and other rights. The proposed Final Judgment also continue to expand. However, Bayer In sum, the proposed remedies will requires Bayer to provide BASF with currently lacks soybeans suitable for the ensure that BASF can step into Bayer’s certain complementary assets, which Midwest, an important soybean growing shoes, thereby preserving the will give scale and scope benefits to the region in the United States. By competition that the merger would divested GM seeds and traits businesses, providing BASF with a richer pool of otherwise destroy. The monitoring and supply agreements, which will genetic material, the proposed Final trustee to be appointed will have close allow BASF to maintain the Judgment creates a strong incentive for

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BASF to continue Bayer’s efforts to services, and BASF can terminate these that would arise both from the disrupt the market and provide new distribution contracts on a country-by- horizontal combination of Bayer’s and benefits to farmers and consumers. country basis as soon as it is able to Monsanto’s nematicidal seed distribute these products on its own. treatments, as well as from the vertical B. Foundational Herbicides integration of Bayer’s dominant seed C. Pipeline Herbicides Section IV of the proposed Final treatments and Monsanto’s dominant Judgment also requires Bayer to divest The proposed Final Judgment requires seed businesses. assets relating to its foundational the divestiture of certain crop protection First, the proposed Final Judgment herbicides business. The proposed Final products that are complementary to requires Bayer to divest all intellectual Judgment requires Bayer to divest all Bayer’s trait business. Today, Bayer property associated with its Poncho, intellectual property related to engages in parallel research across its VOTiVO, and TWO.0 seed treatment glufosinate, the active ingredient in various seeds and crop protection brands. The Complaint alleges that the Bayer’s Liberty herbicide, including businesses, developing new herbicides merged firm could use its control over intellectual property relating to and new traits that confer tolerance to Poncho, which is uniquely effective mixtures of glufosinate with other those herbicides. Bayer is motivated to against corn rootworm, to disadvantage chemicals. Bayer is also required to pursue trait research in part because its corn seed rivals and diminish divest its R&D projects, which will successful commercialization of a trait competition in the GM corn seed incentivize BASF to continue to develop will generate additional returns through market. VOTiVO is an important new innovations for farmers. the sale of the associated herbicide, and nematicidal seed treatment for corn, In addition, Bayer will be required to vice versa. Therefore, Section IV of the soy, and cotton, and in combination divest all facilities used to manufacture proposed Final Judgment also requires with other divestitures described below, glufosinate. Bayer will also divest Bayer to divest its R&D projects relating its divestiture to BASF remedies the certain facilities used to ‘‘formulate’’ to ketoenole and N,O-chelator (‘‘NOC’’) merger’s likely harm in the market for (i.e., mix with water and other inactive herbicides. These herbicides, if nematicidal seed treatments. Because ingredients) and package glufosinate to successful, would be sold in VOTiVO and TWO.0 are each typically create Liberty for sale to customers. conjunction with the ketoenole- and sold in combination with Poncho, Specifically, the proposed Final NOC-tolerant traits Bayer is developing, divestiture of the intellectual property Judgment requires Bayer to divest its which also are being divested. By associated with all three products will large North American facilities in requiring divestiture of both the trait allow BASF to offer American farmers Regina, Canada and Muskegon, projects and the associated herbicide the same packages of Poncho-branded Michigan, which formulate and package projects, the proposed Final Judgment seed treatments as Bayer does today. a significant percentage of the Liberty preserves BASF’s incentive to pursue The proposed Final Judgment also sold in the United States. Because these innovations. requires Bayer to divest intellectual Bayer’s global formulation facilities are The proposed Final Judgment also property associated with its ILeVO and also used for unrelated products not provides BASF full access to Bayer’s COPeO seed treatments, which are both being divested and supply very little of Balance Bean herbicide. Bayer recently based on the same active ingredient, the Liberty used in the United States, introduced BalanceGT soybeans, which fluopyram. ILeVO and COPeO protect the proposed Final Judgment permits contain a GM trait conveying tolerance soybeans and cotton seeds, respectively, Bayer to retain some formulation to both glyphosate and isoxaflutole, a from nematodes; ILeVO is also the first facilities, most of which are located selective herbicide contained in Bayer’s seed treatment to combat soybean SDS outside the United States. However, Balance Bean product. BalanceGT effectively. The ILeVO and COPeO Paragraph IV.G of the proposed Final soybeans are poised to compete with divestitures, in combination with the Judgment requires Bayer to enter into an Monsanto’s herbicide-tolerant soybeans, divestiture of VOTiVO, will address the agreement to formulate Liberty for but Balance Bean is not yet approved for merger’s likely harm in the markets for BASF, at cost, for up to three years to spraying over the top of crops. The nematicidal seed treatments. The ensure that BASF can meet farmer proposed Final Judgment requires Bayer divestiture of ILeVO will also prevent demand for the product during the to transfer intellectual property Bayer from using its control over ILeVO transition. The proposed Final Judgment associated with its Balance Bean to disadvantage Monsanto’s soybean limits the duration of these formulation herbicide business to BASF; Paragraph seed rivals and diminish competition in services to ensure that BASF will IV.G gives BASF the option of entering the market for GM soybean seeds, as become fully independent of Bayer as a temporary isoxaflutole supply alleged in the Complaint. soon as practicable. agreement with Bayer; and Paragraph Bayer also will transfer all intellectual In certain countries outside of the IV.L commits Bayer to using best efforts property used by these divested seed United States, the proposed Final to obtain the remaining regulatory treatment businesses, including all Judgment also provides that Bayer will approvals for use of isoxaflutole over patents, licenses, know-how, trade distribute glufosinate products on the top of crops. These requirements names, and data or information BASF’s behalf for a limited period. This ensure that BASF will have the same collected on the products. The only accommodation affects only a small ability to offer farmers the combination exception is patents related to portion of total glufosinate sales and of both the BalanceGT trait and the fluopyram, which Bayer primarily uses ensures business continuity in those Balance Bean herbicide as Bayer would in other non-seed treatment products, international jurisdictions in which have if the merger had not occurred. such as fungicides applied to foliage. BASF requires time to develop the Therefore, the proposed Final Judgment business infrastructure or to secure the D. Seed Treatments requires Bayer to provide BASF with a local regulatory authorizations Section IV of the proposed Final perpetual, royalty-free license for all necessary to sell the product. To Judgment also requires Bayer to divest patents related to the use of fluopyram encourage BASF to become fully assets relating to its seed treatment in seed treatments. The proposed Final independent from Bayer as soon as businesses. Collectively, these Judgment also requires Bayer to divest practicable, the proposed Final divestitures remedy the likely all R&D projects associated with these Judgment limits the duration of these anticompetitive effects of the merger seed treatment products, as well as a

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product in development that would Bayer’s worldwide headquarters in immediately after the divestitures are expand and improve on these existing Nunhem, Netherlands, and all global completed. seed treatment businesses. R&D facilities, sales offices, and The Monitoring Trustee will ensure: Paragraph IV.G of the proposed Final operations centers. This will provide (1) that Defendants expeditiously Judgment requires Bayer, at BASF’s BASF with the necessary assets and comply with all of their obligations and option, to toll manufacture the active infrastructure to continue vigorously perform all of their responsibilities ingredients used in the divested seed competing, innovating, and developing under the proposed Final Judgment and treatments for an initial period of up to new vegetable varieties. All customer the Stipulation and Order, (2) that the two years, and to provide formulation information, including lists, accounts, Divestiture Assets remain economically and distribution services for the seed and credit records will also be viable, competitive, and ongoing treatments for up to two years. With transferred to ensure that existing businesses prior to being fully divested prior approval of the United States, customers receive uninterrupted to BASF, and (3) that competition in the certain of these arrangements may be service. relevant businesses is maintained extended for up to an additional four Bayer also will divest intangible throughout the United States. The years. These agreements ensure that assets currently used by the vegetable Monitoring Trustee will have the power BASF can immediately replace Bayer as seed business. Critically, all intellectual and authority to monitor the an effective competitor with the property—including patents, licenses, Defendants’ compliance with the terms divested seed treatments. BASF has its and copyrights—will be transferred to of the proposed Final Judgment. The own existing seed treatment businesses BASF. In addition, BASF will receive Monitoring Trustee also will have the and will use the time under the research data relating to historic and authority to investigate complaints agreements to prepare its own facilities current R&D efforts. These divestitures relating to Bayer and Monsanto’s to manufacture and distribute the seed will allow BASF to develop new and compliance with the proposed Final treatments, or to arrange for other innovative vegetable seeds for current Judgment including, but not limited to, suppliers to do so. and future customers. any complaints relating to the agreements Bayer and Monsanto have or E. Digital Agriculture G. Employees will enter into with BASF. The Section IV of the proposed Final As part of the divestitures, over four Monitoring Trustee will have access to Judgment also requires Bayer to divest thousand Bayer employees who all personnel, books, records, and its digital agriculture business to BASF. currently support the various divestiture information necessary to monitor Currently, the leading global businesses will become BASF Defendants’ compliance with the agricultural businesses project that the employees. These employees will proposed Final Judgment, and will serve industry will move toward ‘‘integrated immediately bring critical business at the cost and expense of Bayer. solutions,’’ which are combinations of experience to BASF. As an added The Monitoring Trustee will file traditional agricultural input products safeguard, Paragraph IV.E of the reports every 30 days with the United that are optimized for use with one proposed Final Judgment provides States and, as appropriate, the Court another or combined with other BASF the right to hire additional until the completion of the required services. These companies have personnel to ensure that BASF can divestitures. The reports will set forth described digital agriculture as the become as effective a competitor and the efforts by Bayer and Monsanto to ‘‘glue’’ that binds the products together innovator as Bayer is today in each of comply with their obligations under the and the core of any future integrated the relevant markets. Bayer is required proposed Final Judgment and the solution. This trend has led them to to make information available to BASF Stipulation and Order. After completion develop digital agriculture products to about the employees supporting the of the divestitures, the Monitoring protect their position in traditional businesses and assets to be divested, Trustee will provide reports as agricultural markets, including GM seed subject to applicable privacy and requested by the United States. confidentiality protections. BASF then markets. To provide BASF with the I. Firewall digital agriculture capabilities needed to will have the right to make offers of replace Bayer as a competitor going employment to these individuals. To Section IX of the proposed Final forward, the proposed Final Judgment ensure that BASF will have the ability Judgment requires Bayer and BASF to requires Bayer to divest all assets related to hire experienced personnel, the implement firewall procedures to to its digital agriculture portfolio and proposed Final Judgment prohibits prevent each company’s confidential pipeline of products. Bayer from interfering with BASF’s business information from being used efforts to hire any Bayer or Monsanto by the other for any purpose that could F. Vegetables employees with relevant expertise. harm competition. Within twenty days Finally, Section IV of the proposed of the Court approving the Stipulation Final Judgment requires Bayer to divest H. Monitoring Trustee and Order, Bayer and Monsanto must a comprehensive set of tangible and Section VIII of the proposed Final submit their planned procedures for intangible assets representing Bayer’s Judgment provides the United States the maintaining firewalls. Additionally, entire global vegetable seed business. option to seek the appointment of a Bayer and BASF must explain the Bayer’s vegetable seed business operates Monitoring Trustee subject to the requirements of the firewalls to certain under the Nunhems brand name, a Court’s approval. The United States officers and other business personnel business acquired by Bayer in 2002. intends to recommend a trustee for the responsible for the commercial The assets to be divested include all Court’s approval. The person selected relationships between the two of Bayer’s vegetable seed breeding will have the necessary expertise and companies about the required treatment capabilities, which encompass 24 experience to ensure that competition of confidential business information. different crops (including tomatoes, continues unabated across the various Bayer’s and BASF’s adherence to these onions, carrots, cucumbers, and markets. Given the scope of the required procedures is subject to a semi-annual watermelons, among others) and divestitures, it is critical that the trustee audit by the Monitoring Trustee. These approximately 2,400 varieties. be in a position to review and resolve measures are necessary to ensure that Additional assets to be divested include any issues that may arise beginning the supply and transition services

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agreements between Bayer and BASF do that the divestitures take place Judgment will expire ten years from the not facilitate coordination or other expeditiously and that BASF and Bayer date of its entry, except that after six (6) anticompetitive behavior during the reduce entanglements as quickly as years from the date of its entry, the Final interim period before BASF becomes possible after BASF acquires the Judgment may be terminated upon fully independent of Bayer. Divestiture Assets. notice by the United States to the Court Paragraph XIV.A provides that the and Defendants that the divestitures J. Prohibition on Recombinations United States retains and reserves all have been completed and that the To ensure that BASF and Bayer rights to enforce the provisions of the continuation of the Final Judgment is no remain independent competitors, proposed Final Judgment, including longer necessary or in the public Section XI of the proposed Final rights to seek an order of contempt from interest. Judgment prohibits Bayer and BASF the Court. Under the terms of this from recombining any of the Divestiture Paragraph, all Defendants, including L. Stipulation and Order Assets with competing Bayer BASF, have agreed that in any civil Bayer, Monsanto, and BASF have businesses. First, Bayer is prohibited contempt action, any motion to show entered into the Stipulation and Order, from reacquiring any of the Divestiture cause, or any other similar action which was filed with the Court at the Assets during the term of the Final brought by the United States regarding same time as the Complaint, to ensure Judgment. Second, BASF may not an alleged violation of the Final that, pending the divestitures, the acquire from Bayer any assets or Judgment, the United States may Divestiture Assets are maintained such businesses that compete with the establish the violation and the that the divestitures will be effective. Divestiture Assets. These provisions appropriateness of any remedy by a The Stipulation and Order also requires ensure that Bayer and BASF cannot preponderance of the evidence, and that Bayer to hold Monsanto as a separate undermine the purpose of the proposed the Defendants have waived any entity until the divestitures are Final Judgment by later entering into a argument that a different standard of complete, so that the merger can be new transaction that would reduce the proof should apply. This provision unwound if Bayer fails to complete the competition that the divestitures have aligns the standard for compliance required divestitures to BASF. This step preserved. Finally, Section XI prohibits obligations with the standard of proof is necessary in this case because the Bayer and BASF from entering into any that applies to the underlying offense divestiture package was crafted new collaboration, such as a research that the compliance commitments specifically taking into consideration and development joint venture, or from address. BASF’s existing assets and capabilities, expanding the scope of any existing Paragraph XIV.B provides additional and if BASF is unable to acquire the collaboration, involving the Divestiture clarification regarding the interpretation assets, simply divesting the package to Assets. This provision prevents Bayer of the provisions of the proposed Final another purchaser would not preserve and BASF from circumventing the Judgment. The proposed Final Judgment competition. The Stipulation and Order purpose of the proposed Final Judgment was drafted to restore all competition also binds all three defendants to the by, for example, entering into a that would otherwise be harmed by the terms of the proposed Final Judgment partnership to jointly develop new merger. The Defendants agree that they pending the Judgment’s entry by the traits, which could reduce or eliminate will abide by the proposed Final Court. BASF’s incentive to innovate Judgment, and that they may be held in independently in some or all of the contempt of this Court for failing to IV. REMEDIES AVAILABLE TO relevant markets. The provision permits comply with any provision of the POTENTIAL PRIVATE LITIGANTS BASF and Bayer to engage in certain proposed Final Judgment that is stated Section 4 of the Clayton Act, 15 ordinary-course-of-business commercial specifically and in reasonable detail, as U.S.C. § 15, provides that any person relationships, such as crop protection interpreted in light of this who has been injured as a result of product supply agreements. They also procompetitive purpose. conduct prohibited by the antitrust laws may engage in other collaborations if Paragraph XIV.C of the proposed may bring suit in federal court to approved by the United States in its sole Final Judgment further provides that recover three times the damages the discretion. should the Court find in an enforcement person has suffered, as well as costs and proceeding that the Defendants have reasonable attorneys’ fees. Entry of the K. Enforcement Provisions violated the Final Judgment, the United proposed Final Judgment will neither The proposed Final Judgment States may apply to the Court for a one- impair nor assist the bringing of any contains provisions designed to promote time extension of the Final Judgment, private antitrust damages action. Under compliance and make the enforcement together with such other relief as may be the provisions of Section 5(a) of the of consent decrees as effective as appropriate. In addition, in order to Clayton Act, 15 U.S.C. § 16(a), the possible. As set forth in the Stipulation compensate American taxpayers for any proposed Final Judgment has no prima and Order, BASF has agreed to be joined costs associated with the investigation facie effect in any subsequent lawsuit to this action for purposes of the and enforcement of violations of the that may be brought against Defendants. divestiture. Including BASF is proposed Final Judgment, Paragraph appropriate because, after extensive XIV.C provides that in any successful V. PROCEDURES AVAILABLE FOR analysis, the United States has effort by the United States to enforce MODIFICATION OF THE PROPOSED determined that BASF is a necessary this Final Judgment against a Defendant, FINAL JUDGMENT party to effectuate complete relief; the whether litigated or resolved prior to The United States and Defendants divestiture package was crafted litigation, that Defendant agrees to have stipulated that the proposed Final specifically taking into consideration reimburse the United States for Judgment may be entered by the Court BASF’s existing assets and capabilities, attorneys’ fees, experts’ fees, or costs after compliance with the provisions of and divesting the package to another incurred in connection with any the APPA, provided that the United purchaser would not preserve enforcement effort, including the States has not withdrawn its consent. competition. Thus, as discussed above, investigation of the potential violation. The APPA conditions entry upon the the proposed Final Judgment imposes Finally, Section XV of the proposed Court’s determination that the proposed certain obligations on BASF to ensure Final Judgment provides that the Final Final Judgment is in the public interest.

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The APPA provides a period of at judgments in antitrust cases brought by among other things, the relationship least 60 days preceding the effective the United States be subject to a 60-day between the remedy secured and the date of the proposed Final Judgment comment period, after which the court specific allegations set forth in the within which any person may submit to shall determine whether entry of the government’s complaint, whether the the United States written comments proposed Final Judgment ‘‘is in the decree is sufficiently clear, whether regarding the proposed Final Judgment. public interest.’’ 15 U.S.C. § 16(e)(1). In enforcement mechanisms are sufficient, Any person who wishes to comment making such a determination, the court, and whether the decree may positively should do so within 60 days of the date in accordance with the statute as harm third parties. See Microsoft, 56 of publication of this Competitive amended in 2004, is required to F.3d at 1458–62. With respect to the Impact Statement in the Federal consider: adequacy of the relief secured by the Register, or the last date of publication (A) the competitive impact of such judgment, decree, a court may not ‘‘engage in an in a newspaper of the summary of this including termination of alleged violations, unrestricted evaluation of what relief Competitive Impact Statement, provisions for enforcement and would best serve the public.’’ United whichever is later. All comments modification, duration of relief sought, States v. BNS, Inc., 858 F.2d 456, 462 received during this period will be anticipated effects of alternative remedies (9th Cir. 1988) (quoting United States v. considered by the United States, which actually considered, whether its terms are Bechtel Corp., 648 F.2d 660, 666 (9th ambiguous, and any other competitive Cir. 1981)); see also Microsoft, 56 F.3d remains free to withdraw its consent to considerations bearing upon the adequacy the proposed Final Judgment at any of such judgment that the court deems at 1460–62; United States v. Alcoa, Inc., time prior to the Court’s entry of necessary to a determination of whether 152 F. Supp. 2d 37, 40 (D.D.C. 2001); judgment. The comments and the the consent judgment is in the public InBev, 2009 U.S. Dist. LEXIS 84787, at response of the United States will be interest; and *3. Courts have held that: filed with the Court. In addition, (B) the impact of entry of such judgment [t]he balancing of competing social and comments will be posted on the upon competition in the relevant market or political interests affected by a proposed markets, upon the public generally and Antitrust Division’s internet website antitrust consent decree must be left, in the individuals alleging specific injury from first instance, to the discretion of the and, in certain circumstances, published the violations set forth in the complaint in the Federal Register. Attorney General. The court’s role in including consideration of the public protecting the public interest is one of Written comments should be benefit, if any, to be derived from a insuring that the government has not submitted by mail to: determination of the issues at trial. breached its duty to the public in consenting Kathleen S. O’Neill 15 U.S.C. § 16(e)(1)(A) & (B). In to the decree. The court is required to Chief, Transportation, Energy & considering these statutory factors, the determine not whether a particular decree is Agriculture Section court’s inquiry is necessarily a limited the one that will best serve society, but Antitrust Division one as the government is entitled to whether the settlement is ‘‘within the reaches of the public interest.’’ More elaborate United States Department of Justice ‘‘broad discretion to settle with the requirements might undermine the 450 5th Street, NW, Suite 8000 defendant within the reaches of the effectiveness of antitrust enforcement by Washington, DC 20530 public interest.’’ United States v. consent decree. The proposed Final Judgment Microsoft Corp., 56 F.3d 1448, 1461 Bechtel, 648 F.2d at 666 (emphasis provides that the Court retains (D.C. Cir. 1995); see generally United added) (citations omitted).3 In jurisdiction over this action, and the States v. SBC Commc’ns, Inc., 489 F. determining whether a proposed parties may apply to the Court for any Supp. 2d 1, 15–17 (D.D.C. 2007) settlement is in the public interest, a necessary or appropriate modification, (assessing public interest standard court ‘‘must accord deference to the interpretation, or enforcement of the under the Tunney Act); United States v. government’s predictions about the Final Judgment. U.S. Airways Group, Inc., 38 F. Supp. 3d efficacy of its remedies, and may not 69, 75 (D.D.C. 2014) (explaining that the require that the remedies perfectly VI. ALTERNATIVES TO THE ‘‘court’s inquiry is limited’’ in Tunney PROPOSED FINAL JUDGMENT match the alleged violations.’’ SBC Act settlements); United States v. InBev Commc’ns, 489 F. Supp. 2d at 17; see The United States considered, as an N.V./S.A., No. 08–1965 (JR), 2009–2 also U.S. Airways, 38 F. Supp. 3d at 75 alternative to the proposed Final Trade Cas. (CCH) ¶ 76,736, 2009 U.S. (noting that a court should not reject the Judgment, seeking preliminary and Dist. LEXIS 84787, at *3, (D.D.C. Aug. proposed remedies because it believes permanent injunctions against the 11, 2009) (noting that the court’s review others are preferable); Microsoft, 56 F.3d merger and proceeding to a full trial on of a consent judgment is limited and at 1461 (noting the need for courts to be the merits. The United States is only inquires ‘‘into whether the ‘‘deferential to the government’s satisfied, however, that the relief in the government’s determination that the predictions as to the effect of the proposed remedies will cure the proposed Final Judgment will preserve proposed remedies’’); United States v. antitrust violations alleged in the competition in each relevant market in Archer-Daniels-Midland Co., 272 F. complaint was reasonable, and whether the United States. Thus, the proposed Supp. 2d 1, 6 (D.D.C. 2003) (noting that the mechanisms to enforce the final Final Judgment will protect competition the court should grant due respect to the judgment are clear and manageable’’).2 as effectively as, and will achieve all or United States’ prediction as to the effect substantially all of the relief the United As the United States Court of Appeals for the District of Columbia Circuit has States would have obtained through, 3 held, under the APPA a court considers, Cf. BNS, 858 F.2d at 464 (holding that the litigation, but avoids the time, expense, court’s ‘‘ultimate authority under the [APPA] is and uncertainty of a full trial on the limited to approving or disapproving the consent 2 The 2004 amendments substituted ‘‘shall’’ for decree’’); United States v. Gillette Co., 406 F. Supp. merits. ‘‘may’’ in directing relevant factors for courts to 713, 716 (D. Mass. 1975) (noting that, in this way, consider and amended the list of factors to focus on the court is constrained to ‘‘look at the overall VII. STANDARD OF REVIEW UNDER competitive considerations and to address picture not hypercritically, nor with a microscope, THE APPA FOR THE PROPOSED potentially ambiguous judgment terms. Compare 15 but with an artist’s reducing glass’’). See generally FINAL JUDGMENT U.S.C. § 16(e) (2004), with 15 U.S.C. § 16(e)(1) Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the (2006); see also SBC Commc’ns, 489 F. Supp. 2d at remedies [obtained in the decree are] so The Clayton Act, as amended by the 11 (concluding that the 2004 amendments ‘‘effected inconsonant with the allegations charged as to fall APPA, requires that proposed consent minimal changes’’ to Tunney Act review). outside of the ‘reaches of the public interest’ ’’).

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of proposed remedies, its perception of ‘public interest’ is not to be measured by the recognition that the court’s ‘‘scope the market structure, and its views of comparing the violations alleged in the of review remains sharply proscribed by the nature of the case). complaint against those the court precedent and the nature of Tunney Act Courts have greater flexibility in believes could have, or even should proceedings.’’ SBC Commc’ns, 489 F. approving proposed consent decrees have, been alleged.’’). Because the Supp. 2d at 11.4 A court can make its than in crafting their own decrees ‘‘court’s authority to review the decree public interest determination based on following a finding of liability in a depends entirely on the government’s the competitive impact statement and litigated matter. ‘‘[A] proposed decree exercising its prosecutorial discretion by response to public comments alone. must be approved even if it falls short bringing a case in the first place,’’ it U.S. Airways, 38 F. Supp. 3d at 76. of the remedy the court would impose follows that ‘‘the court is only on its own, as long as it falls within the authorized to review the decree itself,’’ VIII. DETERMINATIVE DOCUMENTS range of acceptability or is ‘within the and not to ‘‘effectively redraft the There are no determinative materials reaches of public interest.’’’ United complaint’’ to inquire into other matters or documents within the meaning of the States v. Am. Tel. & Tel. Co., 552 F. that the United States did not pursue. APPA that were considered by the Supp. 131, 151 (D.D.C. 1982) (citations Microsoft, 56 F.3d at 1459–60. As a United States in formulating the omitted) (quoting United States v. court in this district confirmed in SBC proposed Final Judgment. Gillette Co., 406 F. Supp. 713, 716 (D. Communications, courts ‘‘cannot look Mass. 1975)), aff’d sub nom. Maryland beyond the complaint in making the Dated: May 29, 2018 v. United States, 460 U.S. 1001 (1983); public interest determination unless the Respectfully Submitted, see also U.S. Airways, 38 F. Supp. 3d at complaint is drafted so narrowly as to Scott I. Fitzgerald 76 (noting that room must be made for make a mockery of judicial power.’’ 489 Robert A. Lepore the government to grant concessions in F. Supp. 2d at 15. Katherine A. Celeste the negotiation process for settlements In its 2004 amendments, Congress Jeremy Evans (D.C. Bar #478097) (citing Microsoft, 56 F.3d at 1461)); made clear its intent to preserve the Attorneys for the United States United States v. Alcan Aluminum Ltd., practical benefits of utilizing consent U.S. Department of Justice 605 F. Supp. 619, 622 (W.D. Ky. 1985) decrees in antitrust enforcement, adding Antitrust Division (approving the consent decree even the unambiguous instruction that 450 5th Street, NW, Suite 8000 though the court would have imposed a ‘‘[n]othing in this section shall be Washington, DC 20530 greater remedy). To meet this standard, construed to require the court to Tel.: (202) 353–3863 the United States ‘‘need only provide a conduct an evidentiary hearing or to Fax: (202) 616–2441 E-mail: [email protected] factual basis for concluding that the require the court to permit anyone to settlements are reasonably adequate intervene.’’ 15 U.S.C. § 16(e)(2); see also [FR Doc. 2018–12202 Filed 6–12–18; 8:45 am] remedies for the alleged harms.’’ SBC U.S. Airways, 38 F. Supp. 3d at 76 BILLING CODE 4410–11–P Commc’ns, 489 F. Supp. 2d at 17. (indicating that a court is not required Moreover, the court’s role under the to hold an evidentiary hearing or to 4 See United States v. Enova Corp., 107 F. Supp. APPA is limited to reviewing the permit intervenors as part of its review 2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney remedy in relationship to the violations under the Tunney Act). The language Act expressly allows the court to make its public interest determination on the basis of the that the United States has alleged in its wrote into the statute what Congress competitive impact statement and response to complaint, and does not authorize the intended when it enacted the Tunney comments alone’’); United States v. Mid-Am. court to ‘‘construct [its] own Act in 1974, as Senator Tunney Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade hypothetical case and then evaluate the explained: ‘‘[t]he court is nowhere Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D. Mo. 1977) decree against that case.’’ Microsoft, 56 compelled to go to trial or to engage in (‘‘Absent a showing of corrupt failure of the F.3d at 1459; see also U.S. Airways, 38 extended proceedings which might have government to discharge its duty, the Court, in F. Supp. 3d at 75 (noting that the court the effect of vitiating the benefits of making its public interest finding, should . . . carefully consider the explanations of the must simply determine whether there is prompt and less costly settlement government in the competitive impact statement a factual foundation for the through the consent decree process.’’ and its responses to comments in order to government’s decisions such that its 119 Cong. Rec. 24,598 (1973) (statement determine whether those explanations are conclusions regarding the proposed of Sen. Tunney). Rather, the procedure reasonable under the circumstances.’’); S. Rep. No. settlements are reasonable); InBev, 2009 for the public interest determination is 93–298, at 6 (1973) (‘‘Where the public interest can U.S. Dist. LEXIS 84787, at *20 (‘‘[T]he left to the discretion of the court, with be meaningfully evaluated simply on the basis of briefs and oral arguments, that is the approach that should be utilized.’’).

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