The deal would create the world’s largest integrated pesticides and seeds company, the commission said, saying this limited the number of competitors selling herbicides and seeds in Europe.
“The commission has preliminary concerns that the proposed acquisition could reduce competition in a number of different markets resulting in higher prices, lower quality, less choice and less innovation,” it said in a statement.
While the commission could block the deal, it has approved others in the industry, such as Dow’s tie-up with DuPont and ChemChina’s takeover of Syngenta — although only after securing big concessions.
The commission said divestments offered by Bayer so far did not go far enough and that it aimed to make a final decision on the deal by next January.
“Bayer looks forward to continuing to work constructively with the commission with a view to obtaining the commission’s approval”, the German company said in a statement, saying it still aimed to have the transaction approved by the year end.
Among individual markets where competition was at risk, the commission named Monsanto’s weed killer glyphosate, or Roundup, which competes with Bayer’s glufosinate; vegetable and canola seeds, as well as licensing of cotton seed technology to peers.
A merger would also reduce competition in the market for the genetic traits behind herbicide tolerance, which are typically licensed out to third-party seed companies.
In addition, the commission said the deal might slow the race to develop new products, such as wheat seeds and herbicides against weeds that have grown resistant to existing products.
The Commission said it was working with regulators in other markets, such as the US, Australia and Brazil to vet the Bayer-Monsanto deal.