The EU approval is subject to the German company selling off its seed and pesticide businesses, along with research capacity.
"We have approved Bayer's plans to take over Monsanto because the parties' remedies, worth well over €6bn, meet our competition concerns in full,” said EU competition commissioner, Margrethe Vestager, yesterday.
An amalgamated Bayer and Monsanto would create the world's largest integrated pesticides and seeds group. Worth US$62.5bn, the deal is still awaiting approval of the US anti-trust agencies.
The Commission noted the deal, as originally presented, would have significantly reduced competition on price and innovation in Europe and globally in a number of different markets. It said it also had concerns that it would have strengthened Monsanto's dominant position on certain markets, where Bayer had been an important challenger.
The EU officials said they received more than one million petitions over the deal, that they evaluated over 2,000 different product markets and 2.7 million internal documents to produce the ruling.
Bayer’s commitments on divestures ensure there will be effective competition and innovation in seeds, pesticides and digital agriculture markets after this merger, and they will also result in streamlined R&D, noted the Commission.
“That is important because we need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices. And we need competition to push companies to innovate in digital agriculture and to continue to develop new products that meet the high regulatory standards in Europe, to the benefit of all Europeans and the environment."
As well as asset sales, Bayer has agreed to grant a license to its entire global digital agriculture product portfolio and pipeline products to “ensure continued competition on this emerging market.”
Monsanto is the world's largest supplier of seeds, which generates most of its sales in the US and Latin America. It also sells glyphosate, which is the most used pesticide worldwide to control weeds. Bayer is the second largest supplier of pesticides worldwide, with a stronger focus in Europe. It is also an important globally active seeds supplier for a number of crops.
The proposed merger of Monsanto and Bayer is one of a recent trio of such farm supply company tie-ups. Low grain prices have heralded a wave of consolidation in that sector with Dow and Dupont amalgamating as well as ChemChina and Syngenta.
US farmer groups strongly oppose the deals on the basis of market distortion.
The US Justice Department said, in a statement on its website yesterday, said it would press on with its review and that the market in the two regions was quite different.