Seed merger facing SA competition authorities

Created: Thursday, 05 April 2012 07:54

Two maize seed companies have been attempting to convince the competition authorities in South African that their merger would benefit both farmers and consumers, as well as bring higher-yielding, improved maize products to the market

Pioneer Hi-Bred and Pannar Seed have faced criticism that a merger between the two entities would have a negative impact on the agricultural sector by effectively reducing the number of major maize seed companies in South Africa from three to two.

South African seed breeder Pannar said that the loss of market share to seed companies utilising modern technology, including the likes of Monsanto, had led it to attempt a tie up with the US-based multinational seed producer Pioneer Hi-Bred International.

The merging parties have argued that the failure to approve the merger would lead to a continuation in Pannar’s decline as an independent maize seed competitor and further reduce “its ability to act as an effective competitive constraint”.

The commission, however, contested this statement by insisting that in the event the merger does not receive approval, Pannar’s dependence on Monsanto’s technology would lead it to forge a partnership with two other global players currently without a presence in SA – Syngenta or Dow.

“The only factual evidence presented by the commission to the tribunal was testimony by Dow and Syngenta that they might consider entering the South African maize seed market at some uncertain point in the future, and that partnering with Pannar would be their preferred route to entry,” argued a Pannar representative.

The companies have been fighting their case at the Competition Appeal Court after failing to win the approval of the Competition Tribunal and the Competition Commission.