United States of America v. Bayer AG and Monsanto Company; Proposed Final Judgment and Competitive Impact Statement, 27652-27680 [2018-12202]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 83, Number 114 (Wednesday, June 13, 2018)]
[Notices]
[Pages 27652-27680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12202]



[[Page 27651]]

Vol. 83

Wednesday,

No. 114

June 13, 2018

Part II





Department of Justice





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Antitrust Division





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United States of America v. Bayer AG and Monsanto Company; Proposed 
Final Judgment and Competitive Impact Statement; Notice

Federal Register / Vol. 83 , No. 114 / Wednesday, June 13, 2018 / 
Notices

[[Page 27652]]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States of America v. Bayer AG and Monsanto Company; 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16(b)-(h), that a proposed Final 
Judgment, Stipulation and Order, and Competitive Impact Statement have 
been filed with the United States District Court for the District of 
Columbia in United States of America v. Bayer AG and Monsanto Company, 
Civil Action No. 1:18-cv-1241. On May 29, 2018, the United States filed 
a Complaint alleging that Bayer AG's proposed acquisition of Monsanto 
Company would violate Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. 
The proposed Final Judgment, filed at the same time as the Complaint, 
requires Bayer AG to divest a substantial collection of assets relating 
to seeds and traits, crop protection, and digital agriculture.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at https://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be mailed to Kathleen S. O'Neill, 
Chief, Transportation, Energy & Agriculture Section, Antitrust 
Division, Department of Justice, 450 5th Street NW, Suite 8000, 
Washington, DC 20530.

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, 450 5th Street NW, Suite 8000, 
Washington, DC 20530, Plaintiff, v. Bayer AG, Kaiser-Wilhelm-Allee 
1, Leverkusen, Germany 51368, and Monsanto Company, 800 North 
Lindbergh Boulevard, St. Louis, MO 63167, Defendants.

Civil Action No.: 1:18-cv-1241
Judge James E. Boasberg

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to prevent Bayer AG from acquiring Monsanto Company. The United 
States alleges as follows:

I. INTRODUCTION

    1. Bayer's proposed $66 billion acquisition of its rival, Monsanto, 
would combine two of the largest agricultural companies in the world. 
Across the globe, Bayer and Monsanto compete to sell seeds and 
chemicals that farmers use to grow their crops. This competition has 
bolstered an American farming industry that contributes hundreds of 
billions of dollars a year to the economy, provides millions of jobs 
across the country, and ensures a safe and reliable food supply for 
consumers in the United States and around the world.
    2. If allowed to proceed, the proposed acquisition would transform 
the agricultural industry and harm competition across a broad range of 
products. Most prominently, the acquisition would eliminate competition 
to develop and sell genetically modified seeds in cotton, canola, and 
soybeans--three of the largest crops grown in the United States--and 
the herbicides that are paired with these seeds to form the foundation 
of farmers' weed-control strategies.
    3. These agricultural technologies emerged in the 1990s when 
Monsanto introduced ``Roundup Ready'' soybeans, which were genetically 
engineered to resist Monsanto's herbicide, Roundup. Monsanto's 
invention allowed farmers who planted Roundup Ready soybeans to spray 
Roundup over the top of their crops, thereby killing the weeds without 
harming the crops. It was a wildly popular invention; by 2005, almost 
90% of U.S. soybean acres were planted with Roundup Ready seeds. In 
response, in 2009, Bayer launched its own ``LibertyLink'' genetically 
modified soybeans, which were engineered to withstand Bayer's Liberty 
herbicide. Both companies have introduced similar innovations in cotton 
and canola, generating competition that has resulted in higher crop 
yields, lower prices, and greater choice for American farmers. Today, 
Bayer's weed-control systems are the only competitive alternatives to 
Monsanto's Roundup Ready systems in cotton, canola, and soybeans.
    4. Bayer and Monsanto also compete head-to-head to develop the next 
generation of transformative products, including cotton, canola, and 
soybean seeds with new genetically modified traits, as well as other 
innovative products that improve yields for farmers. This competition 
is central to their businesses. Monsanto's chief technology officer has 
said that innovation is ``the heart and soul of who we are.'' 
Similarly, Bayer's core strategy is to become the ``most innovative'' 
agricultural company in the world. Both companies invest significant 
sums of money into research and development and monitor each other's 
efforts, spurring each other to work faster and invest more to improve 
their offerings and develop new products. For instance, Monsanto 
recently developed a seed treatment product that protects crops from 
destructive worms called nematodes, directly challenging Bayer's 
historic dominance in that space. The proposed acquisition would 
eliminate this competition to develop new products that farmers will 
depend on for decades into the future.
    5. The merger would also substantially lessen competition through 
the vertical integration of the two companies. Specifically, by 
combining Monsanto's strong position in seeds with Bayer's dominant 
position in certain seed treatments, the merger would give the combined 
company the incentive and ability to harm its seed rivals by raising 
the price of those seed treatments--a key input for genetically 
modified seeds. For example, today, Bayer sells the only seed treatment 
that effectively controls a destructive pest called corn rootworm. 
Because Bayer does not sell corn seeds itself, it has a strong 
incentive to sell that seed treatment to all corn seed companies, 
including Monsanto's rivals. But the merger would change the calculus 
for Bayer because it would now own Monsanto, the largest supplier of 
corn seeds in the United States. Armed with Monsanto's strong position 
in corn seeds, the merged company would likely charge its seed rivals 
more for the seed treatment, knowing that they rely on the product and 
would be less able to compete effectively without it.
    6. Finally, the merger would eliminate head-to-head competition 
between Bayer and Monsanto to develop and sell seeds for five types of 
vegetables: tomatoes, carrots, cucumbers, onions, and watermelons. 
Although vegetable seeds are not genetically modified like cotton, 
canola, and soybeans, Bayer and Monsanto compete aggressively with one 
another to breed higher-quality and higher-yielding varieties.
    7. By eliminating competition between Bayer and Monsanto and 
combining their businesses, the proposed acquisition would result in

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higher prices, less innovation, fewer choices, and lower-quality 
products for farmers and consumers throughout the United States and 
around the world. To prevent those harms, this unlawful acquisition 
should be enjoined.

II. DEFENDANTS AND THE TRANSACTION

    8. Bayer is a life-sciences company based in Leverkusen, Germany. 
The company employs nearly 100,000 people worldwide and has operations 
in almost 80 countries. Bayer has three main business lines: 
pharmaceuticals, which focuses on prescription medicines; consumer 
health, which focuses on over-the-counter products; and its 
agricultural business, Bayer Crop Science. Over the past decade, Bayer 
Crop Science has become one of the largest global agricultural 
companies. Today, its crop protection business is the second largest in 
the world, and its seeds and traits business is also among the world's 
largest. In 2016, Bayer Crop Science had about $12 billion in annual 
revenues.
    9. Monsanto, based in St. Louis, Missouri, is also a leading 
producer of agricultural products. Monsanto employs more than 20,000 
people in almost 70 countries. As noted, in the 1990s, Monsanto 
pioneered a revolutionary technology that enables certain crops to 
resist exposure to glyphosate, the active ingredient in Monsanto's 
Roundup herbicide. This technology propelled Monsanto's success: today, 
Monsanto is the leading global producer of seeds and traits and is 
among the world's largest producers of crop protection products. In 
2017, Monsanto had almost $15 billion in annual revenues.
    10. On September 14, 2016, Bayer agreed to acquire Monsanto for 
approximately $66 billion.

III. JURISDICTION AND VENUE

    11. The United States brings this action, and the Court has 
subject-matter jurisdiction, under Section 15 of the Clayton Act, 15 
U.S.C. Sec.  25, to prevent and restrain Defendants from violating 
Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    12. Defendants are engaged in, and their activities substantially 
affect, interstate commerce. Bayer and Monsanto sell agricultural 
products, including seeds and crop protection products, throughout the 
United States and the world.
    13. Defendants have consented to venue and personal jurisdiction in 
this district. Venue is also proper under Section 12 of the Clayton 
Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec.  1391.

IV. RELEVANT MARKETS

    14. As noted, Bayer and Monsanto compete across a broad range of 
agricultural products, including genetically modified (GM) seeds and 
traits for row crops; crop protection products, such as herbicides and 
seed treatments; and vegetable seeds. The proposed acquisition would 
substantially lessen competition in the following 17 products:

Bayer-Monsanto: Relevant Products

GM Seeds and Traits
Cotton:
     Herbicide-tolerant traits
     Insect-resistant traits
     GM cotton seeds
Canola:
     Herbicide-tolerant traits
     GM canola seeds
Soybeans:
     Herbicide-tolerant traits
     GM soybeans
Corn:
     GM corn seeds

Crop Protection
Foundational herbicides
Nematicidal seed treatments:
     Corn
     Soybeans
     Cotton

Vegetables
     Carrot seeds
     Cucumber seeds
     Onion seeds
     Tomato seeds
     Watermelon seeds

    15. Each of these products is a relevant product and line of 
commerce under Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. The 
industry views these products as separate business lines, and they 
satisfy the well-accepted hypothetical monopolist test in the U.S. 
Department of Justice and Federal Trade Commission Horizontal Merger 
Guidelines, which asks whether a hypothetical monopolist likely would 
impose at least a small but significant and non-transitory increase in 
price. Such a price increase for these products would not be defeated 
by substitution to alternative products.
    16. The relevant geographic markets in this case vary by product. 
For seeds and traits generally, the markets are regional because seeds 
are tailored to regional growing conditions (such as weather and soil 
type) and suppliers can charge different prices for seeds and traits to 
customers in different regions. With the exception of soybeans, 
however, virtually all of the regions affected by the merger have a 
similar market structure, so in this case it is appropriate to 
aggregate them to a national level for convenience. For soybeans, the 
market structure differs across regions; thus, the relevant geographic 
market is the southern United States, where Bayer has focused its 
soybean breeding program and been particularly successful.
    17. For the relevant crop protection products (foundational 
herbicides and nematicidal seed treatments), the geographic markets are 
national. Bayer and Monsanto sell these products throughout the United 
States. In addition, these products require U.S. regulatory approval, 
which is expensive and time-consuming, so competition is limited to 
products that have obtained the necessary approvals. Similar products 
sold in other countries but not approved for use in the United States 
are not reasonable substitutes for American farmers.
    18. For these reasons, in each of the relevant geographic markets 
for seeds and crop protection products, a hypothetical monopolist 
likely would impose at least a small but significant and non-transitory 
increase in price.
    19. Most of the relevant markets are already highly concentrated, 
and in each market the merger would significantly increase 
concentration. The more concentrated a market and the more a 
transaction increases concentration in that market, the more likely it 
is that the transaction will reduce competition. Concentration is 
typically measured by market shares and by the widely-used Herfindahl-
Hirschman Index (HHI). If the post-transaction HHI would be more than 
2,500 and the change in HHI more than 200, the transaction is presumed 
to enhance market power and substantially lessen competition. See, 
e.g., United States v. Anthem, Inc., 855 F.3d 345, 349 (D.C. Cir. 
2017). Given the high concentration levels and increases in 
concentration in the relevant markets in this case, the proposed 
acquisition presumptively violates Section 7 of the Clayton Act.

A. Genetically Modified Seeds and Traits

    20. Several markets in this case involve genetically modified seeds 
and traits. A genetic trait is simply an attribute of a plant, such as 
being tall, short, or leafy. Most traits derive from a plant's natural 
DNA. Over the last 30 years, however, a small set of highly 
sophisticated biotechnology firms--including Bayer and Monsanto--have 
successfully inserted DNA from other organisms into the DNA of certain 
crops, giving the crops a desirable trait associated with that non-
native DNA. For example, scientists have developed traits that make 
crops resistant to certain

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pests, allowing farmers to reduce their use of chemical insecticides. 
And scientists have developed herbicide-tolerant traits that make crops 
resistant to herbicides like Roundup, allowing a farmer to spray the 
herbicide over an entire field and kill the weeds without harming the 
crops. A genetically modified seed is simply a seed that contains DNA--
and hence the desirable trait--of a different organism. Farmers have 
embraced this technology: today, more than 90% of the corn, soybeans, 
cotton, and canola seeds grown in the United States are genetically 
modified. These seeds provide farmers with considerable savings in 
labor and expense, increased yields, and reduced soil erosion by 
eliminating the need for tilling fields. Thus, a vast majority of 
farmers do not view conventional seeds as a reasonable substitute.
    21. With the rise of genetically modified crops, it has also become 
harder for smaller companies, which lack the massive resources 
necessary to devote to research and development, to compete in these 
high-tech markets. It typically takes hundreds of millions of dollars 
and more than a decade to bring a genetically modified seed variety or 
a new pesticide to market. A company must also have access to an 
extensive library of high-quality seeds that are necessary for research 
and plant breeding. Today, such resources are increasingly controlled 
by four vertically integrated companies: Monsanto, Bayer, DowDuPont, 
and Syngenta, also known as the ``Big Four.'' Although smaller 
independent seed companies also sell genetically modified seeds to 
farmers, most of those companies license traits and seed varieties from 
Monsanto, limiting their ability to compete.
    22. As described below, Bayer and Monsanto are close competitors in 
three important row crops: cotton, canola, and soybeans.

(1) Genetically modified cotton

    23. Cotton is a major crop grown across the southern United States, 
particularly in states like Texas and Georgia. Cotton seeds are widely 
used in vegetable oil, packaged foods, and animal feed, and cotton 
fibers are widely used in clothing. In 2017, U.S. farmers planted about 
12 million acres of cotton and sales of cotton seeds totaled over $800 
million. For cotton, the proposed acquisition would harm competition in 
the markets for (1) genetically modified cotton seeds, (2) herbicide-
tolerant traits for cotton, and (3) insect-resistant traits for cotton.
    24. GM cotton seeds. Bayer and Monsanto have long been the two 
leading suppliers of genetically modified cotton seeds throughout the 
United States. In addition to owning critical traits (discussed below), 
they own extensive libraries of elite seed varieties, which are 
essential for developing and commercializing competitive cotton seeds. 
If the transaction is allowed to proceed, Bayer and Monsanto would have 
a combined 59% share of genetically modified cotton seeds in the United 
States. The post-transaction HHI would be approximately 4,100, with an 
increase of approximately 1,500 resulting from the transaction.
    25. Herbicide-tolerant traits. Given the widespread adoption of 
genetically modified cotton seeds, herbicide-tolerant traits are now 
used on approximately 98% of the cotton acres in the United States. In 
2017, Bayer and Monsanto accounted for virtually all of those acres, 
with about 19% of acres containing Bayer's traits and about 80% 
containing Monsanto's traits. The merger would thus give Bayer a 
monopoly in these markets: the post-transaction HHI would be 
approximately 9,600, with an increase of approximately 3,000. Bayer and 
Monsanto are also competing aggressively to develop the next generation 
of herbicide-tolerant cotton traits. Farmers need these innovations to 
combat the growing number of weeds, like pigweed, that have become 
increasingly resistant to glyphosate in recent years. Without the 
merger, these new traits would likely compete in the future.
    26. Insect-resistant traits. Bayer and Monsanto also compete for 
sales of insect-resistant traits that protect cotton from destructive 
pests such as moth and bollworm larvae. In 2017, insect-resistant 
traits were used on approximately 88% of the cotton acres in the United 
States. Bayer and Monsanto accounted for approximately 85% of those 
acres, with about 10% of acres containing Bayer's traits and about 75% 
containing Monsanto's traits. The post-transaction HHI would be 
approximately 7,400, with an increase of approximately 1,400.

(2) Genetically modified canola

    27. Canola is an important crop used in vegetable oil, packaged 
foods, biodiesel fuels, and animal feed. In the United States, canola 
is grown on approximately 1.7 million acres, mainly in North Dakota, 
but also in several other states. The proposed merger would harm 
competition in the markets for (1) genetically modified canola seeds 
and (2) herbicide-tolerant traits for canola.
    28. GM canola seeds. In 2016, genetically modified canola seeds 
accounted for $83 million in sales in the United States, and virtually 
all canola seeds contain genetically modified traits. Bayer's canola 
innovations in recent years have allowed it to surpass Monsanto. In 
2016, Bayer's share of genetically modified canola seeds in the United 
States was 60% and Monsanto's share was 14%. The post-transaction HHI 
would be approximately 5,600, with an increase of approximately 1,700.
    29. Herbicide-tolerant traits. Bayer and Monsanto are even more 
dominant in herbicide-tolerant traits for canola, where they have a 
combined share of 95%. Virtually all canola seeds planted in the United 
States contain either Bayer's LibertyLink trait or Monsanto's Roundup 
Ready trait. For these traits, the post-transaction HHI would be 
approximately 9,200, with an increase of over 4,100.

(3) Genetically modified soybeans

    30. After corn, soybeans are the largest crop grown in the United 
States. Soybeans are widely used in vegetable oil, packaged foods, and 
animal feed. In 2017, U.S. farmers planted almost 90 million acres of 
soybeans, accounting for $4.6 billion in seed purchases, and 94% of 
those acres contained herbicide-tolerant traits. The proposed 
acquisition would harm competition in the markets for (1) genetically 
modified soybeans and (2) herbicide-tolerant traits for soybeans.
    31. GM soybeans. Since launching genetically modified soybeans in 
the 1990s, Monsanto has been the market leader. For years, Monsanto's 
only competitors were companies that relied on Monsanto for licenses to 
the Roundup Ready traits. Since 2009, however, Bayer has emerged as a 
serious threat: it has invested over $250 million to develop an 
independent source of soybean varieties and in 2014 launched its own 
soybean business, Credenz, which sells varieties that perform well in 
the southern United States. In 2017, Bayer had a 6% share of soybeans 
in that region and Monsanto had a 39% share. The post-transaction HHI 
in the southern United States would be approximately 2,800, with an 
increase of approximately 500.
    32. Herbicide-tolerant traits. Bayer and Monsanto also have the 
leading herbicide-tolerant traits for soybeans. Monsanto's Roundup 
Ready trait has historically dominated sales, but in recent years 
Bayer's LibertyLink trait has made inroads. In 2017, Monsanto had a 67% 
share of U.S. sales and Bayer's share had risen to 14%. (The

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remaining market participants use a post-patent version of the original 
Roundup Ready trait.) For herbicide-tolerant traits, the post-
transaction HHI would be approximately 6,900 on a national basis, with 
an increase of approximately 1,900. Without the merger, competition 
between the two companies would likely increase: Bayer and Monsanto 
each have new traits in their research pipelines that would confer 
tolerance to additional herbicides and compete in the future.

B. Foundational Herbicides

    33. In addition to competing to sell herbicide-tolerant seeds, 
Bayer and Monsanto also compete to sell the foundational herbicides--
glyphosate and glufosinate--that are paired with these seeds.
    34. Foundational herbicides are herbicides used on row crops that 
have two defining characteristics. First, they are ``non-selective,'' 
meaning that they kill all types of weeds, thus providing farmers with 
the broadest possible protection for their crops. In contrast, other 
types of herbicides are ``selective,'' meaning that they kill only 
certain types of weeds. Selective herbicides are often used to 
supplement non-selective herbicides but are not generally used in lieu 
of them. Second, foundational herbicides can be paired with seeds that 
are engineered to tolerate the herbicide. Other non-selective 
herbicides are not a substitute for farmers because no seeds are 
engineered to withstand them, so spraying those herbicides over a crop 
would damage it. For these reasons, farmers have no good substitutes 
for foundational herbicides. Today, glyphosate and glufosinate are the 
only two foundational herbicides, but, as discussed further below, new 
foundational herbicides are in development.
    35. Bayer and Monsanto are the world's leading producers of 
foundational herbicides. As noted above, glyphosate was developed by 
Monsanto and is the active ingredient in Roundup; glufosinate was 
developed by Bayer and is the active ingredient in Liberty. Since the 
launch of genetically modified crops in the 1990s, Monsanto's Roundup 
has dominated the market. As some weeds have developed resistance to 
glyphosate, however, farmers are increasingly turning to Liberty. And 
while glufosinate and glyphosate are now off patent, competition from 
generic suppliers has not prevented Bayer and Monsanto from maintaining 
branded price premiums. In 2017, Bayer had a 7% share of the market for 
foundational herbicides in the United States, and Monsanto had a 53% 
share. Thus, this market is already highly concentrated and the merger 
would result in a post-transaction HHI of approximately 3,700, with an 
increase of over 650.
    36. Going forward, competition between Bayer and Monsanto to 
develop next-generation weed-management systems is likely to increase. 
According to a Bayer strategy document, the company's number one ``Must 
Win Battle'' is to ``[e]stablish LibertyLink as a foundation trait for 
broadacre [row] crops and position Liberty herbicide as the superior 
weed management tool.'' Bayer is also developing new non-selective 
herbicides for soybeans and corn called N,O-Chelators (NOCs), along 
with traits conferring tolerance to NOCs. If successful, NOCs would 
form the basis of a new foundational herbicide system that would rival 
Monsanto's Roundup Ready-based systems.
    37. Likewise, Monsanto is actively pursuing innovations in 
foundational herbicides. For example, Monsanto is developing an 
improved formulation of Roundup that is expected for release in 2019. 
Bayer's and Monsanto's incentives to independently pursue these future 
products in close competition with each other would disappear post-
merger.

C. Seed Treatments

    38. In addition to relying on genetically modified seeds and 
herbicides, farmers also protect their crops using seed treatments, 
which are coatings applied to seeds before they are planted. Seed 
treatments are a critical tool for modern farmers, and today at least 
one seed treatment is applied to the vast majority of genetically 
modified seeds grown in the United States. Multiple seed treatments can 
be applied to a seed to protect it from various threats; seed 
treatments designed for one purpose (such as killing insects) are 
rarely an effective substitute for seed treatments designed for a 
different purpose (such as controlling fungal diseases).
    39. The merger would likely result in three forms of competitive 
harm related to seed treatments: (1) the loss of head-to-head 
competition between Bayer's and Monsanto's nematicidal seed treatments; 
(2) foreclosure effects resulting from the combination of Monsanto's 
strong position in corn seeds with Bayer's dominant position in 
insecticidal seed treatments for corn rootworm; and (3) foreclosure 
effects resulting from the combination of Monsanto's strong position in 
soybeans with Bayer's dominant position in fungicidal seed treatment 
for sudden death syndrome.

(1) Nematicidal seed treatments for corn, cotton, and soybeans

    40. The merger would eliminate head-to-head competition for 
nematicidal seed treatments used on corn, cotton, and soybeans. 
Nematicidal seed treatments protect crops from parasitic roundworms 
known as nematodes. For corn, cotton, and soybean farmers, there are no 
cost-effective alternatives to nematicidal seed treatments. And, in 
part because seed treatments must be registered on a crop-by-crop 
basis, the treatments for each crop constitute a separate market.
    41. All three nematicidal seed treatment markets are highly 
concentrated. For years, Bayer has had a monopoly in the market for 
nematicidal seed treatments for corn, with over a 95% share in 2017. 
Bayer dominates the market for nematicidal seed treatments for 
soybeans, with a share over 85%. And, in the market for nematicidal 
seed treatments for cotton, Bayer and Syngenta currently share a 
duopoly.
    42. Although Monsanto does not currently sell in this market, it is 
poised to launch its first nematicidal seed treatment, NemaStrike. 
NemaStrike is expected to challenge Bayer's market position in 
nematicidal seed treatments in all three crops--corn, cotton, and 
soybeans. Both Bayer and Monsanto project that NemaStrike will capture 
significant market share from Bayer. By acquiring Monsanto, Bayer would 
thus eliminate the most significant competitive threat to its dominant 
position in these markets, to the detriment of farmers who rely on 
these important products to protect their crops.

(2) Vertical foreclosure--insecticidal seed treatments for corn 
rootworm and genetically modified corn seeds

    43. The merger would also likely harm competition in the market for 
genetically modified corn by combining Monsanto's strong position in 
genetically modified corn seeds with Bayer's dominant position in 
insecticidal seed treatments for corn rootworm.
    44. Corn is the largest crop grown in the United States, accounting 
for over $8 billion in seed sales annually. The vast majority (92%) of 
U.S. corn seeds are genetically modified. Monsanto is the leading 
supplier of those seeds, effectively controlling 50% of the market 
between sales of its own branded seeds and sales through its licensees. 
Monsanto's only significant rival for corn seed is DowDuPont (with a 
34%

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share); a few smaller companies also have a small share.
    45. Although Bayer does not sell corn seeds, it does sell a 
critical seed treatment called Poncho. When Poncho is applied at a high 
rate (with a greater amount of the seed treatment coating per seed), it 
protects corn seeds from corn rootworm--a pest nicknamed ``the billion 
dollar bug'' for the amount of loss it costs farmers each year. Poncho 
is the only significant seed treatment that effectively combats corn 
rootworm. Thus, most of Monsanto's corn seed rivals depend on Poncho 
and are expected to become more dependent as the corn rootworm problem 
grows.
    46. By placing Bayer's Poncho and Monsanto's leading GM corn seed 
under the control of one company, the transaction would give the merged 
company the incentive and ability to foreclose its corn seed rivals who 
lack their own seed treatment product and rely on an independent Bayer 
for their seed treatment supply. Specifically, the merged company would 
likely hinder its corn seed rivals by forcing them to pay more for 
Poncho or by denying them access to it entirely. This loss of 
competition would ultimately hit the pocketbooks of American farmers. 
By making it harder for Monsanto's corn rivals to compete, farmers 
would pay higher prices and have fewer effective choices for 
genetically modified corn seeds throughout the country.

(3) Vertical foreclosure--fungicidal seed treatments for sudden death 
syndrome and genetically modified soybeans

    47. Similarly, the merger would harm competition by combining 
Monsanto's leading position in genetically modified soybeans with 
Bayer's dominant position in fungicidal seed treatments.
    48. As discussed above, Monsanto leads the market for genetically 
modified soybeans. It is followed by DowDuPont, with Bayer emerging as 
a threat and investing heavily to gain share. Smaller players, such as 
Beck's, also serve the market.
    49. Bayer also sells ILeVO, the only seed treatment that 
effectively protects soybeans from a fungal disease called sudden death 
syndrome (SDS). According to Bayer, SDS costs farmers an average of 
over 44 million bushels in lost yield per year, and losses from SDS 
damage are expected to increase, making Bayer's seed treatment a 
critical tool for farmers in areas where SDS is a particular risk. 
Bayer sells ILeVO to Monsanto's soybean rivals, including DowDuPont and 
Beck's. Since the launch of ILeVO in 2015, Bayer's sales of ILeVO have 
doubled annually and are expected to continue to grow steadily over the 
next decade.
    50. If allowed to proceed, the merger would combine Monsanto's 
leading genetically modified soybeans with a key input used on those 
seeds (ILeVO). As a result, the merged company would likely hinder its 
soybean rivals by forcing them to pay more for ILeVO or by denying them 
access to it entirely. This loss of competition would likewise make it 
harder for Monsanto's rivals to compete, and it would result in higher 
prices and fewer choices for genetically modified soybeans.

D. Vegetable Seeds

    51. Finally, the proposed acquisition would eliminate vital 
competition between Bayer and Monsanto for the sale of vegetable seeds. 
In the past 25 years, global vegetable production has doubled as 
breeders have developed new varieties of vegetables with better disease 
resistance and higher yields. Unlike with row crops, however, these 
improvements are due entirely to traditional plant breeding rather than 
genetic modification. Bayer and Monsanto are leaders in these efforts. 
Today, Monsanto is the largest vegetable seed company in the world and 
Bayer is fourth largest. If the merger is allowed to proceed, the 
combined company would dominate the industry, with global sales 
rivaling the combined sales of the second- and third-largest vegetable 
producers (Syngenta and Limagrain, respectively). In the United States, 
the merger would harm competition for five distinct vegetable species: 
carrots, cucumbers, onions, tomatoes, and watermelons.

(1) Carrot seeds

    52. In the United States, Bayer and Monsanto are the dominant 
producers of carrot seeds with a combined market share of approximately 
94%. The post-transaction HHI would be approximately 8,800, with an 
increase of approximately 4,000 resulting from the transaction.
    53. While competition would be harmed in the market for carrot 
seeds as a whole, the effects of the acquisition would be particularly 
acute in the ``cut-and-peel'' carrot segment, which consists of certain 
carrot varieties that are processed and sold as ready-to-eat baby 
carrots. Bayer and Monsanto are particularly close competitors in this 
segment, which constitutes approximately 80% of all carrots consumed in 
the United States.

(2) Cucumber seeds

    54. The market for cucumber seeds is also highly concentrated, with 
Bayer and Monsanto dominating the market with 34% and 56% market 
shares, respectively. The post-acquisition HHI would be approximately 
7,900, with an increase of approximately 3,700.
    55. The effects of the acquisition would be particularly 
significant in the pickling cucumber seed segment, which makes up a 
large majority of cucumber acres in the United States. Bayer and 
Monsanto are two of only three suppliers of pickling cucumber seeds in 
the United States, with Monsanto as the dominant competitor, followed 
by Bayer and a company called Rijk Zwaan, based in the Netherlands. As 
in other markets, Bayer has competed against Monsanto in this segment 
through innovation, developing seedless varieties of pickling cucumbers 
to compete with Monsanto's seeded varieties.

(3) Onion seeds

    56. Bayer and Monsanto are the two largest onion seed producers in 
the United States and globally, with substantial sales across a wide 
variety of onion segments. The U.S. market for onion seeds is already 
highly concentrated--besides Bayer and Monsanto, the only other 
producers are Bejo Zaden B.V., based in the Netherlands, and American 
Takii, Inc., based in California. The merger would give the combined 
company a share of approximately 71%. The post-transaction HHI would be 
approximately 5,000, with an increase of approximately 2,500.

(4) Tomato seeds

    57. Bayer and Monsanto are two of the largest producers of tomato 
seeds in the United States, with market shares of 21% and 34%, 
respectively. The market for tomato seeds is moderately concentrated, 
and the merger would result in a highly concentrated market. The post-
transaction HHI would be approximately 3,000, with an increase of 
approximately 1,400.

(5) Watermelon seeds

    58. Lastly, the watermelon seed market is already highly 
concentrated, with Bayer and Syngenta, followed by Monsanto, as the 
largest suppliers in the United States. Bayer has a 37% market share in 
watermelon seeds, and Monsanto has a 6% share. As a result, the post-
acquisition HHI would be approximately 3,300, with an increase of 
approximately 400. Monsanto's market share in watermelon seeds 
understates its competitive significance; its recent introduction of 
competitive seedless watermelon varieties, which are in high demand and 
already offered

[[Page 27657]]

by Monsanto's competitors, would significantly improve its position 
going forward.

V. ANTICOMPETITIVE EFFECTS

    59. The proposed acquisition would substantially lessen competition 
and harm consumers in each of the relevant markets, either by 
eliminating head-to-head competition between Bayer and Monsanto or, in 
the case of certain seed treatments, raising the price of a key input. 
In each of these markets, the merger would likely result in higher 
prices, lower quality, and reduced choice. The price effects in these 
markets would likely result in hundreds of millions of dollars per year 
in harm, raising costs to farmers and consumers throughout the United 
States.
    60. But the harm does not stop there. The merger would also have a 
significant impact on innovation. Today, four companies dominate the 
industry's research and development efforts for seeds and traits. Bayer 
and Monsanto are the industry leaders, with Bayer emerging as a threat 
to Monsanto's dominance. In 2016, for example, Bayer spent more on 
seeds-related research and development as a percentage of sales than 
any of the other Big Four. As leading innovators, Bayer and Monsanto 
push each other to improve their current products and technologies, 
monitor each other's research efforts, and compete to develop new 
blockbuster products.
    61. Without the merger, this competition would intensify as both 
companies pursue what the industry refers to as integrated solutions--
combinations of seeds, traits, and crop protection products, supported 
by digital-farming technologies and other services. Although integrated 
solutions are still evolving, it is widely believed that only the Big 
Four companies--each with its own unique strengths--will be able to 
offer fully integrated solutions to farmers. With this merger, that 
competition would be lost.

VI. ABSENCE OF COUNTERVAILING FACTORS

    62. Entry would not prevent the merger's likely anticompetitive 
effects. It takes many years and hundreds of millions of dollars to 
discover new crop protection chemicals and to develop and commercialize 
new traits. Once a new trait has been discovered, companies cannot 
successfully incorporate that trait and sell seeds without access to 
the extensive libraries of elite seed varieties that are already owned 
by Bayer, Monsanto, and a small number of other companies. As Bayer's 
and Monsanto's executives have recognized, barriers to entry in the 
relevant markets are extraordinarily high.
    63. In addition to the difficulty of entry, the proposed 
acquisition is unlikely to generate verifiable, merger-specific 
efficiencies that would offset the proposed acquisition's likely 
anticompetitive effects in the relevant markets.

VII. VIOLATIONS ALLEGED

    64. Bayer's proposed acquisition of Monsanto is likely to 
substantially lessen competition in the relevant markets in violation 
of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    65. Unless enjoined, the proposed acquisition would likely have the 
following anticompetitive effects in the relevant markets:
    (a) eliminate present and future competition between Bayer and 
Monsanto;
    (b) lessen innovation;
    (c) raise prices for farmers and other purchasers; and
    (d) reduce quality, service, and choice for farmers and other 
purchasers.

VIII. REQUEST FOR RELIEF

    66. The United States requests that this Court do the following:
    (a) adjudge Bayer's proposed acquisition of Monsanto to violate 
Section 7 of the Clayton Act, 15 U.S.C. Sec.  18;
    (b) permanently enjoin Bayer and Monsanto from consummating their 
proposed acquisition or from entering into or carrying out any other 
agreement, understanding, or plan by which control of the assets or 
businesses of Bayer and Monsanto would be combined;
    (c) award the United States its costs of this action; and
    (d) award the United States other relief that the Court deems just 
and proper.

Dated: _______

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA:

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Makan Delrahim,
Assistant Attorney General for Antitrust.

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Bernard A. Nigro, Jr. (D.C. Bar #412357),
Deputy Assistant Attorney General.

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Donald G. Kempf, Jr.,
Deputy Assistant Attorney General.

-----------------------------------------------------------------------
Patricia A. Brink,
Director of Civil Enforcement.

-----------------------------------------------------------------------
Kathleen S. O'Neill,
Chief, Transportation, Energy & Agriculture Section.

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Caroline E. Laise,
Assistant Chief, Transportation, Energy & Agriculture Section.

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Scott I. Fitzgerald,

Benjamin H. Able,
Don Amlin (D.C. Bar #978349),
Meagan K. Bellshaw,
Cory Brader Leuchten,
Michele B. Cano,
Barbara W. Cash,
Katherine A. Celeste,
Aaron Comenetz (D.C. Bar #479572),
Erin L. Craig,
Emma Dick,
J. Richard Doidge,
Julie Elmer (D.C. Bar #1520972),
Jeremy Evans (D.C. Bar #478097),
Andrew J. Ewalt (D.C. Bar #493433),
Tracy Fisher,
Rachel A. Flipse,
Leah Graham (D.C. Bar #989727),
Brian Hanna,
John A. Holler,
Rachelle R. Ketchum,
Amanda Klovers,
Patrick Kuhlmann,
Robert A. Lepore,
Michelle Livingston (D.C. Bar #461268),
Njeri Mugure,
Michael Nash,
John R. O'Gorman,
Scott Reiter,
James A. Ryan,
Julia A. Schiller (D.C. Bar #986369),
Adam T. Severt,
Patricia L. Sindel (D.C. Bar #997505),
Chinita M. Sinkler,
Mark Tobey,
Scott A. Westrich,
Christopher M. Wilson,
Catharine Wright.

Attorneys for the United States.

U.S. Department of Justice Antitrust Division 450 5th Street, NW, 
Suite 8000 Washington, DC 20530 Tel.: (202) 353-3863 Fax: (202) 616-
2441 E-mail: [email protected].

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, Plaintiff, v. Bayer AG, Monsanto 
Company, and BASF SE, Defendants.

Civil Action No.: 1:18-cv-1241
Judge James E. Boasberg

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiff United States of America filed its Complaint 
against Bayer AG (``Bayer'') and Monsanto Company (``Monsanto'') on May 
29, 2018;
    AND WHEREAS, pursuant to a Stipulation and Order among Bayer, 
Monsanto, and BASF SE (``BASF'') (collectively, ``Defendants'') and 
Plaintiff, the Court has joined BASF as a defendant to this action for 
the purposes of settlement and for the entry of this Final Judgment;
    AND WHEREAS, Plaintiff and Defendants, by their respective

[[Page 27658]]

attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law, and without this 
Final Judgment constituting any evidence against or admission by any 
party regarding any issue of fact or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by this Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain businesses, rights, and assets by Bayer 
and Monsanto to assure that competition is not substantially lessened;
    AND WHEREAS, Plaintiff requires Bayer and Monsanto to make certain 
divestitures to BASF for the purpose of remedying the loss of 
competition alleged in the Complaint;
    AND WHEREAS, Bayer and Monsanto have represented to Plaintiff that 
all of the divestitures required below can and will be made as required 
by this Final Judgment, BASF has represented to Plaintiff that it can 
and will acquire the Divestiture Assets pursuant to its obligations 
under this Final Judgment, and Defendants have represented to Plaintiff 
that they will later raise no claim of hardship or difficulty as 
grounds for failing to comply with their obligations under this Final 
Judgment or for asking this Court to modify any of the provisions 
contained below;
    NOW THEREFORE, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ORDERED, ADJUDGED, AND DECREED:

I. JURISDICTION

    This Court has jurisdiction over the subject matter of and each of 
the parties hereto with respect to this action. The Complaint states a 
claim upon which relief may be granted against Bayer and Monsanto under 
Section 7 of the Clayton Act, as amended (15 U.S.C. Sec.  18). Pursuant 
to the Stipulation and Order filed simultaneously with this Final 
Judgment joining BASF as a defendant to this action, BASF has consented 
to this Court's exercise of specific personal jurisdiction over BASF in 
this matter solely for the purposes of settlement and for the entry and 
enforcement of the Final Judgment.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Bayer'' means Defendant Bayer AG, a German corporation with 
its headquarters in Leverkusen, Germany, its successors and assigns, 
and its subsidiaries, divisions, groups, affiliates, partnerships and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    B. ``Monsanto'' means Defendant Monsanto Company, a Delaware 
corporation with its headquarters in St. Louis, Missouri, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    C. ``BASF'' means Defendant BASF SE, a Societas Europaea with its 
headquarters in Ludwigshafen, Germany, its successors and assigns, and 
its subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    D. ``'839 Business'' means Bayer's global business of researching, 
developing, and manufacturing the BCS-CT12839 pipeline product.
    E. ``Balance Herbicide Business'' means Bayer's global business of 
researching, developing, manufacturing, and selling isoxaflutole-based 
herbicides for use on crops that are isoxaflutole-tolerant as a result 
of genetic modification.
    F. ``Balance Herbicide Divestiture Assets'' means the following 
assets related to the Balance Herbicide Business:
    (1) all tangible assets used primarily by or critical to the 
operation of the Balance Herbicide Business, including, but not limited 
to, all transferable licenses, permits, product registrations, 
regulatory submissions, and authorizations issued by or submitted to 
any governmental organization; all contracts, agreements, leases, 
commitments, certifications, and understandings, including supply 
agreements; and all customer lists, accounts, credit records, and 
transferable customer contracts;
    (2) all patents used by the Balance Herbicide Business;
    (3) a worldwide, exclusive, royalty-free, paid-up, irrevocable, 
perpetual license to Bayer's BALANCE trademark for marketing and 
selling isoxaflutole-based herbicides for use on crops that are 
isoxaflutole-tolerant as a result of genetic modification;
    (4) a worldwide, non-exclusive, royalty-free, paid-up, irrevocable, 
perpetual license (sub-licensable to any tollers designated by BASF) to 
any intellectual property, registration data, technology, know-how, or 
other rights used in the manufacture or formulation of isoxaflutole-
based herbicides for use on crops that are isoxaflutole-tolerant as a 
result of genetic modification; and
    (5) all other intangible assets owned, licensed, controlled, or 
used primarily by or critical to the operation of the Balance Herbicide 
Business, including, but not limited to, all data concerning historical 
and current research and development efforts, including, but not 
limited to, designs of experiments and the results of successful and 
unsuccessful designs and experiments.
    G. ``Broad Acre Seeds and Traits Business'' means Bayer's global 
business of researching, developing, manufacturing, and selling broad 
acre seeds and traits, including, but not limited to, the global cotton 
seed business; the global canola seed business; the global soybean seed 
business; the global LibertyLink trait business for all crops except 
rice; the global research and development programs for wheat and 
``canola quality'' Brassica juncea; and the global trait research and 
development activities. The Broad Acre Seeds and Traits Business 
excludes those assets that relate solely to the following: hybrid rice 
sold in Asia, hybrid cotton sold in India, traditional juncea (mustard) 
and millet sold in India, cotton sold in South Africa, the research and 
development program for sugarcane in Brazil, the research and 
development program for sugarbeets in Europe, and the LibertyLink event 
in rice.
    H. ``Broad Acre Seeds and Traits Divestiture Assets'' means the 
following assets related to the Broad Acre Seeds and Traits Business:
    (1) all tangible assets that comprise the Broad Acre Seeds and 
Traits Business, including, but not limited to, research and 
development activities; all manufacturing plants and equipment, tooling 
and fixed assets, personal property, inventory, office furniture, 
materials, supplies, and other tangible property; all transferable 
licenses, permits, product registrations and regulatory submissions 
(including supporting data), certifications, and authorizations issued 
by or submitted to any governmental organization; all contracts, 
teaming arrangements, agreements, leases, commitments, certifications, 
and understandings, including supply agreements; all customer lists, 
accounts, credit records, and transferable customer contracts; all 
other business and administrative records; all seed production 
facilities; all breeding stations; all research and development 
facilities; all germplasm; and all breeding data, including, but not 
limited to, phenotype, genotype, molecular markers, and performance 
data;
    (2) all intangible assets owned, licensed, controlled, or used by 
the Broad Acre Seeds and Traits Business, including, but not limited 
to, all patents,

[[Page 27659]]

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

[[Page 27660]]

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

[[Page 27661]]

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

[[Page 27662]]

any governmental organization; all contracts, teaming arrangements, 
agreements, leases, commitments, certifications, and understandings, 
including supply agreements; all customer lists, accounts, credit 
records, and transferable customer contracts; all other business and 
administrative records; seed production facilities; breeding stations; 
all research and development facilities; all germplasm; and all 
breeding data, including, but not limited to, phenotype, genotype, 
molecular markers, and performance data; and
    (2) all intangible assets owned, licensed, controlled, or used by 
the Vegetable Seed Business, including, but not limited to, all 
patents, plant variety certificates, licenses and sublicenses, 
intellectual property, copyrights, trademarks, trade names, service 
marks, service names, technical information, computer software and 
related documentation, know-how, trade secrets, drawings, blueprints, 
designs, design protocols, specifications for materials, specifications 
for parts and devices, safety procedures for the handling of materials 
and substances, quality assurance and control procedures, design tools 
and simulation capability, manuals and technical information provided 
by Bayer to its own employees, customers, suppliers, agents, or 
licensees; and research data concerning historical and current research 
and development efforts, including, but not limited to, designs of 
experiments and the results of successful and unsuccessful designs and 
experiments.
    Notwithstanding Paragraphs II(AA)(1) and II(AA)(2) above, the 
Vegetable Seed Divestiture Assets do not include the thirty-four (34) 
office facilities identified in Appendix A, Paragraph 4, or trademarks, 
trade names, service marks, or service names containing the name 
``Bayer.''
    BB. ``Yield and Stress Collaboration'' means any agreement between 
Monsanto and BASF existing as of the date of filing of the Complaint in 
this matter related to a collaboration to develop yield and stress 
traits for row crops.

III. APPLICABILITY

    This Final Judgment applies to Defendants and all other persons in 
active concert or participation with any of them who receive actual 
notice of this Final Judgment by personal service or otherwise.

IV. DIVESTITURES

    A. By the later of ninety (90) calendar days after the filing of 
the Complaint in this matter or ninety (90) calendar days after 
receiving all international antitrust approvals required for the 
transfer of the Divestiture Assets, Bayer and Monsanto are ordered and 
directed to divest the Divestiture Assets to BASF in a manner 
consistent with this Final Judgment. The United States, in its sole 
discretion, may agree to one or more extensions of this period not to 
exceed sixty (60) calendar days in total and shall notify this Court in 
such circumstances. Defendants agree to use their best efforts to 
divest the Divestiture Assets as expeditiously as possible.
    B. Bayer shall permit BASF to have reasonable access to personnel 
and to make inspections of the facilities to be acquired by BASF; 
access to any and all environmental, zoning, and other permit documents 
and information; and access to any and all financial, operational, or 
other documents and information customarily provided as part of a due 
diligence process.
    C. Bayer and Monsanto shall not take any action that will impede in 
any way the permitting, operation, or divestiture of the Divestiture 
Assets.
    D. Unless the United States otherwise consents in writing, the 
divestitures pursuant to Section IV of this Final Judgment shall 
include the entire Divestiture Assets and shall be accomplished in such 
a way as to satisfy the United States, in its sole discretion, that the 
Divestiture Assets can and will be used by BASF as part of the viable, 
ongoing operation of the Divestiture Businesses. The divestitures shall 
be accomplished so as to satisfy the United States, in its sole 
discretion, that none of the terms of any agreement between BASF and 
Bayer and Monsanto give Bayer and Monsanto the ability unreasonably to 
raise BASF's costs, to lower BASF's efficiency, or otherwise to 
interfere in the ability of BASF to compete effectively.
    E. Employees
    (1) Within ten (10) business days following the filing of the 
Complaint in this matter, Bayer shall provide to BASF, the United 
States, and the Monitoring Trustee, organization charts covering every 
person providing any support for the Divestiture Businesses for each 
year since January 1, 2015. Within ten (10) business days of receiving 
a request from BASF, Bayer shall provide to BASF, the United States, 
and the Monitoring Trustee, additional information related to 
identified Relevant Personnel, including name, job title, reporting 
relationships, Hay points, past experience, responsibilities from 
January 1, 2015 through the Divestiture Closing Date, training and 
educational history, relevant certifications, job performance 
evaluations, and current salary and benefits information to enable BASF 
to make offers of employment. If Bayer is barred by any applicable laws 
from providing any of this information to BASF, within ten (10) 
business days of receiving BASF's request, Bayer shall provide the 
requested information to the greatest extent possible under applicable 
laws and also provide a written explanation of its inability to comply 
fully with BASF's request for information regarding Relevant Personnel.
    (2) Upon request, Bayer shall make Relevant Personnel available for 
interviews with BASF during normal business hours at a mutually 
agreeable location. Bayer will not interfere with any negotiations by 
BASF to employ any Relevant Personnel. Interference includes but is not 
limited to offering to increase the salary or benefits of Relevant 
Personnel other than as part of a company-wide increase in salary or 
benefits granted in the ordinary course of business.
    (3) For any Relevant Personnel who elect employment with BASF, 
Bayer shall waive all non-compete and non-disclosure agreements (except 
as noted in Paragraph IV(E)(5)), vest all unvested pension and other 
equity rights, and provide all benefits which Relevant Personnel would 
be provided if transferred to a buyer of an ongoing business.
    (4) For a period of two (2) years from the date of filing of the 
Complaint in this matter, Bayer may not solicit to hire, or hire, any 
such person who was hired by BASF, unless (a) such individual is 
terminated or laid off by BASF or (b) BASF agrees in writing that Bayer 
may solicit or hire that individual.
    (5) Nothing in Paragraph IV(E) shall prohibit Bayer from 
maintaining any reasonable restrictions on the disclosure by any 
employee who accepts an offer of employment with BASF of Bayer's 
proprietary non-public information that is (a) not otherwise required 
to be disclosed by this Final Judgment, (b) related solely to Bayer's 
businesses and clients, and (c) unrelated to the Divestiture Assets.
    (6) BASF's right to hire Relevant Personnel pursuant to Section 
IV(E) and Bayer's obligations under Paragraph IV(E)(1), Paragraph 
IV(E)(2), and Paragraph IV(E)(3) shall last for a period of one (1) 
year after the Divestiture Closing Date.
    F. Asset Warranties
    (1) In addition to any other warranties in the divestiture-related 
agreements entered into by Defendants, Bayer and

[[Page 27663]]

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

[[Page 27664]]

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

[[Page 27665]]

of the filing of the Complaint in this matter (except Poncho/VOTiVO, 
Poncho Plus, and Poncho Super).
    J. Digital Agriculture License Back: At the option of Bayer, BASF 
shall enter into an agreement to provide Bayer a non-exclusive, 
royalty-free, paid-up license to the Digital Agriculture Divestiture 
Assets for the limited purpose of allowing Bayer to sell outside North 
America the following digital agriculture products: Expert.com web 
application; Weedscout mobile application; Xarvio FieldManager web 
application; Xarvio FieldManager mobile application; and Xarvio 
Scouting mobile application. This license shall not give Bayer (1) any 
rights to any improvements made by BASF to the Digital Agriculture 
Divestiture Assets or (2) any rights to use any trademarks or brand 
names divested as part of the Digital Agriculture Divestiture Assets, 
including, but not limited to, Expert.com, Weedscout, or Xarvio.
    K. Third-Party Agreements: At BASF's option, on or before the 
Divestiture Closing Date, Bayer shall assign or otherwise transfer to 
BASF all transferable or assignable agreements, or any assignable 
portions thereof, related to the Divestiture Assets, including, but not 
limited to, all customer contracts, licenses, and collaborations. Bayer 
shall use best efforts to expeditiously obtain from any third parties 
any consent necessary to transfer or assign to BASF all agreements 
related to the Divestiture Assets. To the extent consent cannot be 
obtained and the agreement is not otherwise assignable, in addition to 
the existing mitigation rules agreed upon between Bayer and BASF, Bayer 
shall use best efforts to obtain for BASF, as expeditiously as 
possible, the full benefit of any such agreement as it relates to the 
Divestiture Businesses by assisting BASF to secure a new agreement and 
by taking any other steps necessary to ensure that BASF obtains the 
full benefit of the agreement as it relates to the Divestiture 
Businesses. Bayer will not assert, directly or indirectly, any legal 
claim that would interfere with BASF's ability to obtain the full 
benefit from any transferred third-party agreement to the same extent 
enjoyed by Bayer prior to the transfer.
    L. Licenses, Registrations, and Permits
    (1) Where necessary, BASF will apply for licenses, registrations, 
and permits that support the Divestiture Businesses to replace those 
held by Bayer as expeditiously as possible and, in any event, no later 
than six (6) months from the Divestiture Closing Date. The United 
States, in its sole discretion, may approve one or more extensions of 
this period, for a total of up to an additional six (6) months, for 
BASF to satisfy this requirement. BASF will make best efforts to obtain 
such licenses, registrations, and permits as expeditiously as possible.
    (2) Bayer will make best efforts to assist BASF with acquiring new 
licenses, registrations, and permits to support the Divestiture 
Businesses and, until BASF has the necessary licenses, registrations, 
and permits, Bayer will provide BASF with the benefit of Bayer's 
licenses, registrations, and permits in BASF's operation of the 
Divestiture Assets.
    (3) Bayer will globally maintain all product registrations for 
isoxaflutole, fluopyram, and any other retained product registrations 
related to the Divestiture Businesses, and Bayer will make best efforts 
to obtain regulatory approvals for isoxaflutole formulations used on 
isoxaflutole-tolerant cotton and soybeans.
    M. Modification of Monsanto-BASF Yield and Stress Collaboration: 
The Yield and Stress Collaboration will be modified consistent with the 
following: (1) Defendants shall not contribute any more genes to the 
Yield and Stress Collaboration; (2) the Yield and Stress Collaboration 
will continue as before with respect to genes or events in the three 
active research and development projects, except that BASF will receive 
a license with stacking rights to use in its own seeds any Yield and 
Stress Collaboration trait commercialized by Monsanto, on terms 
acceptable to the United States, in its sole discretion; (3) both Bayer 
and BASF shall receive (a) copies of all other genes and related 
research records in the Yield and Stress Collaboration regardless of 
crop, and (b) non-exclusive research, development, breeding, and 
commercialization rights to these genes in any crop with no cost, 
revenue, or profit sharing; and (4) the terms related to DroughtGard 
shall be unchanged.
    N. Monsanto Midwest Soybean Germplasm: At the option of BASF, on or 
before the Divestiture Closing Date, Bayer and Monsanto shall enter 
into one or more agreements facilitating the transfer and licensing of 
the Midwest Soybean Germplasm Divestiture Assets. The terms and 
conditions of any such agreement reached between Bayer and Monsanto and 
BASF must be acceptable to the United States, in its sole discretion. 
Any amendment or modification of any such agreement may be entered into 
only with the approval of the United States, in its sole discretion. 
Bayer and Monsanto shall perform all duties and provide all services 
required of them under any such agreement reached between Bayer and 
BASF.

V. FINANCING

    Neither Bayer nor Monsanto shall finance all or any part of any 
purchase made pursuant to Section IV of this Final Judgment.

VI. HOLD SEPARATE AND ASSET PRESERVATION

    Until all the divestitures required by this Final Judgment have 
been fully accomplished, Defendants shall take all steps necessary to 
comply with the Stipulation and Order entered by this Court. Defendants 
shall take no action that would jeopardize any divestiture ordered by 
this Court.

VII. AFFIDAVITS

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been accomplished under Section IV, Bayer and 
Monsanto shall deliver to the United States and the Monitoring Trustee 
an affidavit, signed by each of Bayer's and Monsanto's Chief Financial 
Officer and General Counsel, which shall describe the fact and manner 
of Bayer's and Monsanto's compliance with Section IV. Assuming the 
information set forth in the affidavit is true and complete, any 
objection by the United States to information provided by Bayer and 
Monsanto, including limitation on information, shall be made within 
fourteen (14) calendar days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, each of the Defendants shall deliver to the United 
States and the Monitoring Trustee an affidavit that describes in 
reasonable detail all actions it has taken and all steps it has 
implemented on an ongoing basis to comply with this Final Judgment and 
the Stipulation and Order. Each of the Defendants shall deliver to the 
United States and the Monitoring Trustee an affidavit describing any 
changes to the efforts and actions outlined in its earlier affidavits 
filed pursuant to this Final Judgment within fifteen (15) calendar days 
after the change is implemented.
    C. In addition to providing affidavits to the United States and the 
Monitoring Trustee as required under Paragraph VII(A) and Paragraph 
VII(B), Defendants shall immediately notify the United States and the 
Monitoring Trustee verbally and in writing of any potential problems or 
delays in meeting any of the obligations set forth in this Final 
Judgment and the Stipulation and Order.

[[Page 27666]]

    D. Bayer and Monsanto shall keep all records of all efforts made to 
preserve and divest each of the Divestiture Assets until one year after 
such divestitures have been completed. BASF shall keep all records of 
all efforts made to acquire each of the Divestiture Assets until one 
year after such divestitures have been completed.

VIII. APPOINTMENT OF MONITORING TRUSTEE

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

IX. FIREWALL

    A. During the term of any agreement entered into pursuant to 
Paragraph IV(G) or Paragraph IV(H), Bayer and BASF shall implement and 
maintain reasonable procedures to prevent Shared Confidential 
Information from being disclosed by or through implementation and 
execution of these agreements to components or individuals within the 
respective companies involved in the marketing, distribution, or sale 
of competing products.
    B. Bayer and BASF each shall, within twenty (20) business days of 
the entry of the Stipulation and Order, submit to the United States and 
the Monitoring Trustee a document setting forth in detail the 
procedures implemented to effect compliance with Section IX. Upon 
receipt of the document, the United States shall notify Bayer and BASF 
within twenty (20) business days whether, in its sole discretion, it 
approves of or rejects each party's compliance plan. In the event that 
Bayer's or BASF's compliance plan is rejected, the United States shall 
provide

[[Page 27667]]

Bayer or BASF, as applicable, the reasons for the rejection. Bayer or 
BASF, as applicable, shall be given the opportunity to submit, within 
ten (10) business days of receiving a notice of rejection, a revised 
compliance plan. If Bayer or BASF cannot agree with the United States 
on a compliance plan, the United States shall have the right to request 
that this Court rule on whether Bayer's and BASF's proposed compliance 
plan fulfills the requirements of Section IX.
    C. Bayer and BASF shall:
    (1) furnish a copy of this Final Judgment and related Competitive 
Impact Statement within sixty (60) calendar days of entry of the Final 
Judgment to (a) each officer, director, and any other employee that 
will receive Shared Confidential Information; and (b) each officer, 
director, and any other employee that is involved in (i) any contacts 
with the other companies that are parties to any agreement entered into 
pursuant to Paragraph IV(G) or Paragraph IV(H), or (ii) making 
decisions under any agreement entered into pursuant to Paragraph IV(G) 
or Paragraph IV(H);
    (2) furnish a copy of this Final Judgment and related Competitive 
Impact Statement to any successor to a person designated in Paragraph 
IX(C)(1) upon assuming that position;
    (3) annually brief each person designated in Paragraph IX(C)(1) and 
Paragraph IX(C)(2) on the meaning and requirements of this Final 
Judgment and the antitrust laws; and
    (4) obtain from each person designated in Paragraph IX(C)(1) and 
Paragraph IX(C)(2), within thirty (30) calendar days of that person's 
receipt of the Final Judgment, a certification that he or she (a) has 
read and, to the best of his or her ability, understands and agrees to 
abide by the terms of this Final Judgment; (b) is not aware of any 
violation of the Final Judgment that has not been reported to the 
company; and (c) understands that any person's failure to comply with 
this Final Judgment may result in an enforcement action for civil or 
criminal contempt of court against each Defendant or any person who 
violates this Final Judgment.

X. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Stipulation and 
Order, or of determining whether the Final Judgment should be modified 
or vacated, and subject to any legally recognized privilege, from time 
to time authorized representatives of the United States Department of 
Justice, including consultants and other persons retained by the United 
States, shall, upon written request of an authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, and 
on reasonable notice to Defendants, be permitted:
(1) access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control 
of Defendants, related to any matters contained in this Final 
Judgment; and
(2) to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual 
counsel present, regarding such matters. The interviews shall be 
subject to the reasonable convenience of the interviewee and without 
restraint or interference by Defendants.

    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or responses to written 
interrogatories, under oath if requested, related to any of the matters 
contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
Section X shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
Defendants to the United States, Defendants shall represent and 
identify in writing the material in any such information or documents 
to which a claim of protection may be asserted under Rule 26(c)(l)(G) 
of the Federal Rules of Civil Procedure and mark each pertinent page of 
such material, ``Subject to claim of protection under Rule 26(c)(l)(G) 
of the Federal Rules of Civil Procedure,'' then the United States shall 
give Defendants ten (10) calendar days' notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XI. NO REACQUISITION OR RECOMBINATION OF DIVESTITURE ASSETS

    Bayer may not reacquire any part of the Divestiture Assets during 
the term of this Final Judgment. Except for an acquisition pursuant to 
Paragraph IV(F)(2), BASF may not acquire from Bayer during the term of 
this Final Judgment any assets or businesses that compete with the 
Divestiture Assets. In addition, Bayer and BASF shall not, without the 
prior written consent of the United States, enter into any new 
Collaboration involving any of the Divestiture Assets or expand the 
scope of any existing Collaboration involving any of the Divestiture 
Assets during the term of this Final Judgment. The United States will 
notify Bayer and BASF of its decision within sixty (60) calendar days 
of receiving written notification from Bayer and BASF of the proposed 
new or expanded Collaboration. The decision whether or not to consent 
to a Collaboration shall be within the sole discretion of the United 
States.

XII. NOTIFICATION OF FUTURE TRANSACTIONS

    A. For transactions that are not subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. Sec.  18a (the ``HSR 
Act''), Bayer and Monsanto shall not, without providing advanced 
notification to the United States, directly or indirectly acquire a 
financial interest, including through securities, loan, equity, or 
management interest, in any company that researches, develops, 
manufactures, or sells digital agriculture products or soybean, cotton, 
canola, or corn seeds or traits. In addition, Bayer and Monsanto shall 
not acquire any digital agriculture assets, any trait assets, or all or 
substantially all of the germplasm assets from any such company without 
providing advanced notification to the United States.
    B. Such notification shall be provided to the United States in the 
same format as, and per the instructions relating to, the Notification 
and Report Form set forth in the Appendix to Part 803 of Title 16 of 
the Code of Federal Regulations as amended, except that the information 
requested in Items 5 through 8 of the instructions must be provided 
only about digital agriculture products or soybean, cotton, canola, or 
corn seeds or traits. Notification shall be provided at least thirty 
(30) calendar days prior to acquiring any such interest, and shall 
include, beyond what may be required by the applicable instructions, 
the names of the principal representatives of the parties to the 
agreement who negotiated the agreement, and any management or strategic 
plans discussing the proposed transaction. If within thirty (30) 
calendar days after notification, the United States makes a written 
request for additional information, Bayer and

[[Page 27668]]

Monsanto shall not consummate the proposed transaction or agreement 
until thirty (30) calendar days after submitting and certifying, in the 
manner described in Part 803 of Title 16 of the Code of Federal 
Regulations as amended, the truth, correctness, and completeness of all 
such additional information. Early termination of the waiting periods 
in this paragraph may be requested and, where appropriate, granted in 
the same manner as is applicable under the requirements and provisions 
of the HSR Act and rules promulgated thereunder. Section XII shall be 
broadly construed and any ambiguity or uncertainty regarding the filing 
of notice under Section XII shall be resolved in favor of filing 
notice.

XIII. RETENTION OF JURISDICTION

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. ENFORCEMENT OF FINAL JUDGMENT

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including its right to seek an order 
of contempt from this Court. Defendants agree that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of this 
Final Judgment, the United States may establish a violation of this 
Final Judgment and the appropriateness of any remedy therefor by a 
preponderance of the evidence, and they waive any argument that a 
different standard of proof should apply.
    B. The Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore all 
competition harmed by the challenged conduct. Defendants agree that 
they may be held in contempt of, and that the Court may enforce, any 
provision of this Final Judgment that, as interpreted by the Court in 
light of these procompetitive principles and applying ordinary tools of 
interpretation, is stated specifically and in reasonable detail, 
whether or not it is clear and unambiguous on its face. In any such 
interpretation, the terms of the Final Judgment should not be construed 
against either party as the drafter.
    C. In any enforcement proceeding in which the Court finds that the 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with such other relief as may be appropriate. In connection 
with any successful effort by the United States to enforce this Final 
Judgment against a Defendant, whether litigated or resolved prior to 
litigation, that Defendant agrees to reimburse the United States for 
any attorneys' fees, experts' fees, and costs incurred in connection 
with that enforcement effort, including the investigation of the 
potential violation.

XV. EXPIRATION OF FINAL JUDGMENT

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry, except that after six 
(6) years from the date of its entry, this Final Judgment may be 
terminated upon notice by the United States to the Court and Defendants 
that the divestitures have been completed and that the continuation of 
the Final Judgment no longer is necessary or in the public interest.

XVI. PUBLIC INTEREST DETERMINATION

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16, including making copies available to 
the public of this Final Judgment, the Competitive Impact Statement, 
and any comments thereon and the United States' responses to comments. 
Based upon the record before this Court, which includes the Competitive 
Impact Statement and any comments and responses to comments filed with 
this Court, entry of this Final Judgment is in the public interest.

Date:

[Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16]

-----------------------------------------------------------------------
United States District Judge

Appendix A

1. Bayer will retain thirty (30) office facilities largely dedicated 
to non-divested Bayer businesses in Argentina (Buenos Aires and 
Chacabuco), Brazil (Paulinia), Canada (Calgary, Ottawa, Rosthern, 
Saskatoon, and Winnipeg), Czech Republic (Prague), France (two sites 
in Lyon), Germany (Langenfeld and Monheim), Great Britain 
(Cambridge), Greece (Athens and Thessaloniki), Hungary (Budapest), 
Latvia (Riga), Poland (Warsaw), Romania (Bucharest), Russia 
(Moscow), Turkey (Adana, Gebze, Istanbul, Izmir, and Sanliurfa), 
Ukraine (Kiev), and the United States (Champaign, Clayton, and 
Inaha).

2. Bayer will retain one seed cleaning and bagging facility that is 
part of Bayer Crop Science headquarters in Monheim, Germany (known 
as ``EOPC'').

3. Bayer will retain fourteen (14) formulation and filling sites 
largely dedicated to non-divested Bayer products in Argentina 
(Zarate), Australia (Kwinana and Pinkenba), Brazil (Belford Roxo), 
China (Hangzhou), Colombia (Barranquilla), Germany (Frankfurt), 
Guatemala (Amatitl[aacute]n), Japan (Hofu), Korea (Daejeon), South 
Africa (Nigel), Spain (Quart de Poblet), Thailand (Bangpoo), and the 
United States (Kansas City).

4. Bayer will retain thirty-four (34) general office facilities 
largely dedicated to non-divested businesses in Algeria (Algiers), 
Argentina (Munro), Australia (Pinkenba), Belgium (Diegem), Canada 
(Guelph), Chile (Santiago de Chile), Colombia (Bogot[aacute]), Costa 
Rica (San Jos[eacute]), Denmark (Copenhagen), Egypt (Cairo), Germany 
(Monheim), Great Britain (Saffron Walden), Guatemala (Mixco), 
Hungary (Budapest), Iran (Tehran), Japan (Fukuoka), Kazakhstan 
(Astana), Kenya (Nairobi), Morocco (Casablanca and El Jadida), 
Panama (David), Peru (Ica and Lima), Poland (Warsaw), Portugal 
(Carnaxide), Romania (Bucharest), Russia (Krasnodar), Singapore 
(Singapore), South Korea (Anseong-si), Spain (Paterna), Ukraine 
(Kiev), the United States (two sites in West Sacramento), and 
Vietnam (Hanoi).

Appendix B: Monsanto Population Numbers

(1) JVK13764
(2) JVK13662
(3) JVK13647
(4) JVK13604
(5) JVK13363
(6) JVK13294
(7) JVK13624
(8) JVK13564
(9) JVK13301
(10) JVK13302
(11) JVK13304
(12) JVK13303
(13) JVK13305
(14) JVK13306
(15) JVK13307
(16) JVK13279
(17) JVK13281
(18) JVK13282
(19) JVK13283
(20) JVK13278
(21) JVK13280
(22) JVK13284
(23) JVK13592
(24) JVK13593
(25) JVK13596
(26) JVK13591
(27) JVK13594
(28) JVK13595
(29) JVK13598
(30) JVK13205
(31) JVK13224
(32) JVK13450
(33) JVK13455
(34) JVK13457
(35) JVK13458
(36) JVK13251
(37) JVK13451
(38) JVK13452

[[Page 27669]]

(39) JVK13453
(40) JVK13456
(41) JVK13761
(42) JVK13762
(43) JVK13763
(44) JVK13755
(45) JVK13756
(46) JVK13757
(47) JVK13758
(48) JVK13732
(49) JVK13733
(50) JVK13734
(51) JVK13735
(52) JVK13569
(53) JVK13570
(54) JVK13571
(55) JVK13572
(56) JVK13573
(57) JVK13446
(58) JVK13449
(59) JVK13153
(60) JVK13157
(61) JVK13176
(62) JVK13197
(63) JVK13209
(64) JVK13253
(65) JVK13272
(66) JVK13273
(67) JVK13274
(68) JVK13275
(69) JVK13276
(70) JVK13388
(71) JVK13389
(72) JVK13390
(73) JVK13391
(74) JVK13394
(75) JVK13387
(76) JVK13392
(77) JVK13393
(78) JVK13231
(79) JVK13669
(80) JVK13670
(81) JVK13675
(82) JVK13252
(83) JVK13673
(84) JVK13396
(85) JVK13397
(86) JVK13400
(87) JVK13395
(88) JVK13398
(89) JVK13401
(90) JVK13402
(91) JVK13379
(92) JVK13380
(93) JVK13382
(94) JVK13383
(95) JVK13384
(96) JVK13386
(97) JVK13385
(98) JVK13723
(99) JVK13721
(100) JVK13634
(101) JVK13635
(102) JVK13638
(103) JVK13639
(104) JVK13640
(105) JVK13641
(106) JVK13583
(107) JVK13584
(108) JVK13585
(109) JVK13586
(110) JVK13587
(111) JVK13588
(112) JVK13590
(113) JVK13612
(114) JVK13615
(115) JVK13617
(116) JVK13618
(117) JVK13619
(118) JVK13692
(119) JVK13699
(120) JVK13207
(121) JVK13230
(122) JVK13259
(123) JVK13574
(124) JVK13576
(125) JVK13577
(126) JVK13578
(127) JVK13579
(128) JVK13582
(129) JVK13434
(130) JVK13428
(131) JVK13429
(132) JVK13430
(133) JVK13431
(134) JVK13432
(135) JVK13433
(136) JVK13435
(137) JVK13204
(138) JVK13216
(139) JVK13370
(140) JVK13371
(141) JVK13372
(142) JVK13373
(143) JVK13375
(144) JVK13376
(145) JVK13377
(146) JVK13378
(147) JVK13374
(148) JVK13504
(149) JVK13505
(150) JVK13506
(151) JVK13507
(152) JVK13508
(153) JVK13509
(154) JVK13510
(155) JVK13503
(156) JVK13702
(157) JVK13703
(158) JVK13700
(159) JVK13701
(160) JVK13707
(161) JVK13258
(162) JVK13459
(163) JVK13460
(164) JVK13461
(165) JVK13462
(166) JVK13463
(167) JVK13464
(168) JVK13465
(169) JVK13466
(170) JVK13257
(171) JVK13408
(172) JVK13410
(173) JVK13404
(174) JVK13405
(175) JVK13406
(176) JVK13407
(177) JVK13409
(178) JVK13353
(179) JVK13354
(180) JVK13355
(181) JVK13357
(182) JVK13356
(183) JVK13358
(184) JVK13359
(185) JVK13360
(186) JVK13710
(187) JVK13711
(188) JVK13715
(189) JVK13709
(190) JVK13713
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, Plaintiff, v. BAYER AG, MONSANTO 
COMPANY, and BASF SE, Defendants.

Civil Action No.: 1:18-cv-1241
Judge James E. Boasberg

COMPETITIVE IMPACT STATEMENT

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act (``APPA'' or ``Tunney Act''), 15 U.S.C. Sec.  16(b), Plaintiff 
United States of America files this Competitive Impact Statement 
relating to the proposed Final Judgment submitted on May 29, 2018, for 
entry in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

    On September 14, 2016, Defendant Bayer AG (``Bayer'') agreed to 
acquire Defendant Monsanto Company (``Monsanto'') in a merger valued at 
approximately $66 billion. The United States filed a civil antitrust 
Complaint against Bayer and Monsanto on May 29, 2018, seeking to enjoin 
the proposed merger. The Complaint alleges that the proposed merger 
would lessen competition substantially across various markets in the 
agricultural industry, resulting in higher prices, less innovation, 
fewer choices, and lower-quality products for American farmers and 
consumers, in violation of Section 7 of the Clayton Act, 15 U.S.C. 
Sec.  18.
    Simultaneously with the filing of the Complaint, the United States 
has filed a proposed Final Judgment and a Stipulation and Order 
designed to prevent the merger's likely anticompetitive effects. As 
detailed below, the proposed Final Judgment requires Bayer to divest 
its businesses that compete with Monsanto, the seed treatment 
businesses that the merged firm would use to harm competition in 
certain seed markets, and assets supporting those businesses 
(collectively, the ``Divestiture Assets''). Bayer has agreed to divest 
the Divestiture Assets to BASF SE (``BASF''), a global chemical company 
with a multi-billion-dollar crop protection business.\1\ The required 
divestitures will ensure that BASF replaces Bayer as an independent and 
vigorous competitor in each of the

[[Page 27671]]

markets in which the proposed merger would otherwise lessen 
competition.
---------------------------------------------------------------------------

    \1\ Bayer, Monsanto, and BASF are referred to collectively as 
``Defendants.''
---------------------------------------------------------------------------

    The terms of the Stipulation and Order require Defendants to take 
certain steps to ensure that, pending the required divestitures, all of 
the Divestiture Assets will be preserved and that Monsanto will 
continue to be operated independently as a separate business concern.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, although the 
Court would continue to retain jurisdiction to construe, modify, or 
enforce the provisions of the proposed Final Judgment and to punish 
violations thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO ALLEGED VIOLATION

A. The Defendants and the Merger

    Bayer is a life-sciences company based in Leverkusen, Germany. The 
company employs nearly 100,000 people worldwide and has operations in 
nearly 80 countries. Bayer has three main business lines: (1) 
pharmaceuticals, (2) consumer health, and (3) agriculture, the last of 
which is the Bayer Crop Science division. Over the past decade, Bayer 
Crop Science has become one of the largest global agricultural firms. 
Today, its crop protection business is the second largest in the world, 
and its seeds and traits business is also among the world's largest. 
Bayer Crop Science generated almost $12 billion in annual revenues in 
2017.
    Monsanto is a leading producer of agricultural products based in 
St. Louis, Missouri. Over 20,000 people work for the company in almost 
70 countries. Monsanto's innovative technologies have established it as 
a global leader in agriculture; today, it is the leading global 
producer of seeds and traits and is among the world's largest producers 
of crop protection products. In 2017, Monsanto had almost $15 billion 
in annual revenues.
    On September 14, 2016, Bayer agreed to acquire Monsanto for 
approximately $66 billion. In recognition of the significant 
competitive concerns raised by the proposed merger, Bayer has agreed to 
divest agricultural assets valued at approximately $9 billion to BASF. 
As discussed in Section III.K, infra, BASF has agreed to be bound by 
the terms of the proposed Final Judgment.

B. The Competitive Effects of the Proposed Merger across Agricultural 
Markets in the United States

    The Complaint alleges that the proposed merger would reduce 
competition in the United States in 17 distinct agricultural product 
markets. These markets fit into four broad categories: (1) genetically 
modified (``GM'') seeds and traits, (2) foundational herbicides, (3) 
seed treatments, and (4) vegetable seeds. In addition to 
anticompetitive effects in each of the product markets resulting from 
the loss of head-to-head competition or vertical foreclosure, the 
Complaint also alleges that the merger would have a significant impact 
on innovation. Without the merger, competition between Bayer and 
Monsanto would intensify as both companies pursue what the industry 
refers to as ``integrated solutions''--combinations of seeds, traits, 
and crop protection products, supported by digital farming technologies 
and other services. Without the proposed Final Judgment, that 
competition would be lost.

1. GM Seeds and Traits

    Bayer and Monsanto are close competitors in the GM seeds and traits 
markets for three important U.S. row crops: cotton, canola, and 
soybeans. As described in the Complaint, the proposed merger would 
likely lead to a substantial lessening of competition in each of these 
markets, resulting in hundreds of millions of dollars in harm each year 
to American farmers and consumers.
    Cotton is a major crop grown across the southern United States. 
Cotton seeds are widely used in vegetable oil, packaged foods, and 
animal feed, and cotton fibers are widely used in clothing. In 2017, 
U.S. farmers planted about 12 million acres of cotton accounting for 
over $800 million in seed purchases.
    Canola is an important crop used in vegetable oil, packaged foods, 
biodiesel fuels, and animal feed. In the United States, canola is grown 
on approximately 1.7 million acres, mainly in North Dakota but also in 
several other states. GM canola seeds accounted for $83 million in 
domestic sales in 2016.
    Soy is the second-largest crop grown in the United States. Soybeans 
are widely used in vegetable oil, packaged foods, and animal feed. In 
2017, U.S. farmers planted almost 90 million acres of soybeans 
accounting for $4.64 billion in seed purchases.
    A genetic trait is simply an attribute of a plant, such as being 
tall, short, or leafy. In most cases, plant traits derive from the 
plant's natural DNA; however, a small number of highly sophisticated 
biotechnology firms can insert DNA from other organisms into the DNA of 
a plant, giving the plant a desirable trait associated with that non-
native DNA. A GM seed is a seed that contains DNA, and hence a 
desirable trait, of a different organism. Scientists have developed 
herbicide-tolerant traits that give crops the ability to withstand 
exposure to herbicides that would normally damage or kill them, 
allowing a farmer to spray the herbicide over an entire field and 
efficiently kill weeds without harming the crop. Scientists also have 
developed traits that make crops resistant to certain insect pests, 
allowing farmers to prevent these pests from damaging their crops while 
also reducing farmers' use of chemical insecticides. Today, more than 
90% of the soybeans, cotton, and canola grown in the United States is 
grown from GM seeds.

a) Relevant Markets

    As alleged in the Complaint, GM cotton seeds, GM canola seeds, and 
GM soybeans are each relevant product markets under Section 7 of the 
Clayton Act. In canola and soy, nearly all GM seeds contain herbicide-
tolerant traits, but no seeds contain insect-resistant traits. In 
cotton, most GM seeds contain both herbicide-tolerant traits and 
insect-resistant traits (found on 98% and 88% of all cotton acres, 
respectively). The vast majority of farmers do not view conventional 
(i.e., non-GM) seeds as a substitute for GM cotton, GM canola, or GM 
soybeans because GM seeds eliminate much of the labor and expense 
associated with more traditional means of weed and pest management, 
offer higher yields, and reduce soil erosion by decreasing tillage 
requirements. Accordingly, a hypothetical monopolist of any of these GM 
seeds markets could profitably raise prices.
    The Complaint also alleges that insect-resistant traits for cotton 
and herbicide-tolerant traits for cotton, canola, and soybeans are 
relevant product markets under Section 7 of the Clayton Act. Again, the 
vast majority of farmers growing cotton, canola, and soybeans in the 
United States choose to purchase GM seeds and do not consider 
conventional seeds an acceptable alternative. Consequently, GM traits 
are necessary inputs for most seed companies, and a hypothetical 
monopolist of any of the trait markets listed above could profitably 
raise prices.
    The Complaint alleges that the relevant geographic markets for 
these

[[Page 27672]]

GM seeds and traits markets are regional because seeds are tailored to 
local growing conditions (such as weather and soil type), and suppliers 
can charge different prices to customers in different regions. In 
cotton and canola, however, virtually all of the regions affected by 
the merger have similar market conditions, so the regions can 
reasonably be aggregated to a national level for purposes of analysis. 
For soybeans, the market structure differs across regions, and the 
relevant geographic market in which the merger will lead to harm is the 
southern United States, where Bayer has focused its soybean breeding 
program and been particularly successful.

b) Competitive Effects--GM Seeds

    The market for GM cotton seeds in the United States is highly 
concentrated and would become significantly more so if Bayer were 
allowed to acquire Monsanto. Bayer and Monsanto have long been the two 
leading suppliers of GM cotton seeds throughout the United States. In 
addition to owning critical herbicide-tolerant and insect-resistant 
traits, discussed in more detail below, the companies each own 
extensive libraries of elite seed varieties, which are essential for 
breeding and commercializing competitive cotton seeds. If the proposed 
merger were allowed to proceed, Bayer and Monsanto would have a 
combined 59% share of GM cotton seeds in the United States.
    In the market for GM canola seeds in the United States, Bayer and 
Monsanto are by far the two largest competitors, with a combined share 
of approximately 74%. Bayer and Monsanto compete aggressively, and 
Bayer's canola innovations in recent years have allowed it to surpass 
Monsanto, previously the largest firm in this market.
    In the market for GM soybeans, the proposed merger would eliminate 
Bayer as a uniquely positioned challenger to Monsanto, which has 
dominated the market since traits were first commercialized in soybeans 
in the 1990s. For years, Monsanto's competitors relied on Monsanto for 
licenses to GM traits and, in most cases, for licenses to seed 
varieties as well. Bayer, however, invested over $250 million to 
develop an independent source of soybean varieties and launched its own 
branded soybean business, Credenz, which sells varieties that perform 
well in the southern United States. In 2017, Monsanto had a 39% market 
share in that region, with Bayer holding a 6% share that it planned to 
grow in the future.
    Even these figures significantly understate the level of dominance 
the merged company would have in each of these markets. Monsanto 
licenses seeds with traits to certain smaller seed companies (referred 
to in the industry as ``independent seed companies''), leaving these 
smaller rivals with limited ability to exert competitive pressure on 
the merged firm.

c) Competitive Effects--GM Traits

    In addition to effects in each GM seed market, the proposed merger 
would harm American farmers by eliminating head-to-head competition 
between Bayer and Monsanto to develop and sell GM traits. These trait 
markets are even more highly concentrated than the GM seed markets. 
Bayer and Monsanto effectively have a duopoly in cotton herbicide-
tolerant traits, and the proposed merger would lead to a monopoly. In 
2017, Bayer's herbicide-tolerant cotton traits accounted for 19% of the 
market, and Monsanto's accounted for 80%. The proposed merger would 
also lead to a substantial increase in concentration in the market for 
canola herbicide-tolerant traits; virtually all canola seeds planted in 
the United States contain either a Bayer or a Monsanto trait. In the 
soybean herbicide-tolerant trait market, Bayer has chipped away at 
Monsanto's position, and the merger threatens to eliminate Monsanto's 
only serious challenger. In 2017, Bayer and Monsanto represented 14% 
and 67% of the market, respectively, with the remainder attributable to 
market participants using an off-patent version of Monsanto's original 
Roundup Ready trait. Finally, the merger would also significantly 
increase concentration in the already highly concentrated market for 
insect-resistant traits for cotton; Bayer and Monsanto accounted for 
10% and 75% of that market, respectively, in 2017.
    Without the merger, competition between the two companies across 
the GM trait markets would likely increase over time. Bayer and 
Monsanto each have new traits in their research pipelines that would 
confer tolerance to additional herbicides, and farmers would benefit as 
Bayer and Monsanto continued to develop these new innovations.

d) Entry and Expansion in GM Seeds and Traits Markets

    Entry is unlikely to counteract the anticompetitive effects of the 
proposed merger in any of the GM seed or GM trait markets. To compete 
in a GM seed market, a company must have high-quality varieties for the 
current growing season and access to a deep and diverse collection of 
high-quality seeds for breeding future varieties. The varieties must 
also be suitable for the particular geographic region. Elite seed 
varieties suitable for regions in the United States are increasingly 
difficult to procure and are controlled largely by a handful of 
vertically integrated companies, including Monsanto, Bayer, DowDuPont, 
and Syngenta. In addition, the time, expense, and expertise required to 
commercialize a GM trait is prohibitive for all but these four 
companies. Although certain smaller companies may participate in some 
limited aspect of initially discovering a trait, they do not have the 
ability to commercialize these traits.

2. Foundational Herbicides

    In addition to competing to sell herbicide-tolerant seeds, Bayer 
and Monsanto also compete to sell the herbicides that are paired with 
them. Monsanto's Roundup Ready seeds are engineered to tolerate the 
herbicide glyphosate, which Monsanto sells under its Roundup brands, 
while Bayer's LibertyLink seeds are engineered to tolerate glufosinate 
ammonium, the herbicide that Bayer sells under the Liberty brand. These 
``foundational'' herbicides, glyphosate and glufosinate, have unique 
characteristics that make them important competitive alternatives for 
farmers.

a) Relevant Market

    The Complaint alleges that foundational herbicides constitute a 
relevant product market under Section 7 of the Clayton Act. 
Foundational herbicides are herbicides used on row crops that have two 
defining characteristics. First, they are ``non-selective,'' meaning 
that they kill all types of weeds, thus providing farmers with the 
broadest possible protection for their crops. In contrast, other types 
of herbicides are ``selective,'' meaning that they kill only certain 
types of weeds. Selective herbicides are often used to supplement non-
selective herbicides but are not generally used in lieu of them. 
Second, foundational herbicides can be paired with seeds that are 
engineered to tolerate the herbicide. Other non-selective herbicides 
are not a substitute for farmers because no seeds are engineered to 
withstand them, so spraying those herbicides over a crop would damage 
it. For these reasons, farmers have no good substitutes for 
foundational herbicides, and a hypothetical monopolist would find it 
profitable to increase the price of some foundational herbicides by a 
small but significant amount. Today, glyphosate

[[Page 27673]]

and glufosinate are the only two foundational herbicides, but, as 
discussed further below, new foundational herbicides are in 
development.

b) Competitive Effects

    The proposed merger would combine the world's leading producers of 
foundational herbicides and would lead to a presumptively 
anticompetitive increase in market concentration. Since the launch of 
herbicide-tolerant crops in the 1990s, Monsanto's Roundup has dominated 
the market. As some weeds have developed resistance to glyphosate, 
however, farmers are increasingly turning to Liberty. While glufosinate 
and glyphosate are now off patent, competition from generic suppliers 
has not prevented Bayer and Monsanto from maintaining branded price 
premiums. In 2017, Bayer held a 7% share and Monsanto held a 53% share, 
with generic manufacturers holding the remaining share.
    The proposed merger is also likely to eliminate competition between 
Bayer and Monsanto to develop next-generation weed management systems. 
The Complaint explains that Bayer is developing new foundational 
herbicides and related herbicide-tolerant traits that would rival 
Monsanto's Roundup Ready-based systems. Likewise, Monsanto is actively 
pursuing innovations in foundational herbicides, including improvements 
to its Roundup formulations. Absent the merger, Bayer and Monsanto 
would each have incentives to pursue these competing pipeline products 
because any new innovations developed would help win market share from 
the other. In contrast, the merged firm will have different incentives 
due to heightened concerns that new innovations would simply 
cannibalize sales.

c) Entry and Expansion

    As alleged in the Complaint, the anticompetitive effects of the 
proposed merger would not be remedied by entry or expansion in the 
foundational herbicide market. The manufacture of foundational 
herbicides is complex and hazardous, requiring regulatory and safety 
approvals, which are expensive and time-consuming to secure. 
Reputation, brand loyalty, and economies of scale also present barriers 
to entry and expansion.

3. Seed Treatments

    Seed treatments are coatings applied to seeds that can protect the 
seed and the young plant from various insects or diseases. Seed 
treatments are a critical tool for farmers, and one or more seed 
treatments are applied to the majority of GM seeds sold in the United 
States today. Multiple seed treatments can be applied to a seed to 
protect it from various threats; seed treatments designed for one 
purpose (e.g., killing insects) are rarely an effective substitute for 
seed treatments designed for a different purpose (e.g., controlling 
fungal plant diseases).
    The Complaint alleges that the proposed merger would likely result 
in three forms of competitive harm related to seed treatments: (1) the 
loss of head-to-head competition between Bayer's and Monsanto's seed 
treatments for nematodes, (2) vertical foreclosure effects resulting 
from the combination of Monsanto's strong position in corn seeds with 
Bayer's substantial position in insecticidal seed treatments for corn 
rootworm, and (3) vertical foreclosure effects resulting from the 
combination of Monsanto's strong position in soybeans with Bayer's 
substantial position in fungicidal seed treatments for soybean sudden 
death syndrome.

a) Nematicidal Seed Treatments for Corn, Cotton, and Soybeans

    Nematicidal seed treatments protect crops from parasitic roundworms 
known as nematodes. Farmers have no cost-effective alternatives to 
nematicidal seed treatments. Seed treatments are approved for use by 
the government on a crop-by-crop basis, so a soybean farmer, for 
example, chooses between a different set of competitive alternatives 
than a cotton farmer. Accordingly, the Complaint alleges that 
nematicidal seed treatments for corn, cotton, and soybean seeds are 
each relevant markets under Section 7 of the Clayton Act and that a 
hypothetical monopolist in each market could profitably raise prices.
    All three nematicidal seed treatment markets are highly 
concentrated. For years, Bayer has had a monopoly in the market for 
nematicidal seed treatments for corn; in 2017, its market share was 
over 95%. Bayer also dominates the market for nematicidal seed 
treatments for soybeans, with a share over 85%. And in the market for 
nematicidal seed treatments for cotton, Bayer and Syngenta currently 
split the market roughly evenly.
    Although Monsanto does not currently sell any nematicidal seed 
treatments, it is about to launch its first product, NemaStrike. 
Without the merger, both Bayer and Monsanto expected NemaStrike to 
capture significant share from Bayer in all three seed treatment 
markets. The Complaint alleges that the proposed merger would harm 
competition in the nematicidal seed treatment market by removing the 
most significant threat to Bayer's dominance.

b) Vertical Foreclosure--Seed Treatments for Corn Rootworm and GM Corn 
Seeds

    Corn is the largest crop grown in the United States, accounting for 
over $8 billion in seed sales annually. Over 90% of U.S. corn seeds are 
genetically modified, and, like the other GM seeds discussed above, GM 
corn seeds are a relevant product market under Section 7 of the Clayton 
Act. Although Bayer does not sell corn seeds, Monsanto effectively 
controls 50% of the market and faces only one major rival.
    Corn rootworm is a destructive pest that can devastate a farmer's 
fields. To deal with this threat, some farmers rely on Bayer's Poncho 
insecticidal seed treatment. For many farmers, there are no cost-
effective alternatives to insecticidal seed treatments. Because Poncho 
is the only seed treatment that offers meaningful protection against 
corn rootworm, corn seed companies purchase Bayer's insecticidal seed 
treatment to apply to their seeds so they can offer a competitive 
product.
    The merger would likely harm competition in the market for GM corn 
seeds by combining Monsanto's strong position in GM corn seeds with 
Bayer's dominant position in insecticidal seed treatments for corn 
rootworm. The merged firm would have the incentive and ability to make 
its corn seed rivals less competitive by forcing them to pay more for 
Poncho or cutting off their supply of the product. This would limit 
farmers' choices, reduce competition, and ultimately allow the merged 
firm to increase the price for GM corn seeds.

c) Vertical Foreclosure--Fungicidal Seed Treatments for Sudden Death 
Syndrome and GM Soybeans

    The merger is likely to have similar effects in soy. Sudden death 
syndrome (``SDS'') is a fungal disease afflicting millions of soybean 
acres across the United States. In 2015, Bayer began selling ILeVO, the 
only effective fungicidal seed treatment combatting SDS, and ILeVO's 
sales have doubled annually since its introduction. The merger is 
likely to reduce competition by combining Monsanto's leading GM soybean 
business with Bayer's dominant position in fungicidal seed treatments 
for SDS. The merged firm would have the incentive and ability to make 
its soybean rivals less competitive by charging them more for ILeVO or 
cutting off their supply, diminishing competition in the market for GM 
soybeans and reducing choices available to farmers.

[[Page 27674]]

d) Entry and Expansion

    As alleged in the Complaint, the anticompetitive effects of the 
proposed merger would not be remedied by entry or expansion in the 
relevant seed treatment markets. Developing a new, effective seed 
treatment is a slow, costly, and difficult process, and new seed 
treatments require extensive regulatory approvals before farmers can 
use them. Generic versions of the Bayer seed treatments discussed above 
will not be available for at least the next several years due to 
various intellectual property protections. Neither expansion by 
existing seed treatments nor new seed treatments expected to launch in 
the next several years would prevent the anticompetitive effects of the 
proposed merger.

4. Vegetables

    Finally, the Complaint alleges that the proposed merger is likely 
to substantially lessen competition in the markets for five types of 
vegetable seeds: carrots, cucumbers, onions, tomatoes, and watermelons. 
Overall, Monsanto is the largest global vegetable seed company, while 
Bayer is the fourth largest, and the two companies are strong 
competitors in all five of these markets.

a) Relevant Markets

    The Complaint alleges that the seeds markets for carrots, 
cucumbers, onions, tomatoes, and watermelons each constitute a relevant 
market under Section 7 of the Clayton Act. Each vegetable species has 
unique characteristics, and other crops are not viable substitutes. 
Many vegetable seed customers rely on access to particular types of 
vegetables to operate their businesses. For example, in the United 
States, companies that sell pre-cut baby carrots and other carrot 
products, such as juice, purchase carrot seeds to grow their carrots. 
These companies are unlikely to begin growing a different crop in large 
quantities in response to a price increase. Nor are other farmers 
likely to switch crops in response to a price increase because they 
have invested in crop-specific facilities and equipment, possess 
specialized crop-specific knowledge, or live in an area best suited to 
growing that particular type of vegetable. A hypothetical monopolist of 
any of the five vegetable seed species would find it profitable to 
increase prices by at least a small but significant amount because the 
bulk of farmers would not switch away from their preferred vegetable 
crops in response. As vegetable seeds are bred to thrive in particular 
regions of the country, geographic markets are regional, but, similar 
to row crops, virtually all regions affected by the merger have similar 
market structure, so in this case it is appropriate to aggregate these 
regions to the national level for convenience.

b) Competitive Effects

    Bayer and Monsanto are among the largest domestic producers of all 
the vegetable seeds at issue. The Complaint alleges that the proposed 
merger would significantly increase concentration in each market, and 
each market would be highly concentrated with few, if any, other 
significant competitors. In carrots and cucumbers, the merged firm 
would enjoy near-complete dominance, with market shares of 94% and 90%, 
respectively. The combined company would also have high market shares 
in onion seeds (71%) and tomato seeds (55%). In watermelon seeds, Bayer 
holds a 37% market share while Monsanto has a 6% share, with only one 
other significant competitor. Monsanto's market share in watermelon 
seeds understates its competitive significance; its recent introduction 
of competitive seedless watermelon varieties, which are in high demand 
and already offered by Monsanto's competitors, will likely 
significantly improve its position going forward. In each of these 
markets, the proposed merger would eliminate the significant 
competition between Bayer and Monsanto, not only on price, but also on 
quality and innovation, to the overall detriment of American farmers 
and consumers.

c) Entry and Expansion

    Firms that sell vegetable seeds use modern breeding techniques that 
require access to advanced technologies and elite seed varieties, 
making entry challenging. In addition, entering a new vegetable seed 
market can be expensive and time consuming because successful vegetable 
seed companies must invest continuously in developing new, improved 
varieties, some of which can take over a decade to breed and 
commercialize. Certain vegetable markets present additional unique 
challenges; for instance, onions are among the hardest vegetable seeds 
to produce, in part, because they are biennials, generating seed only 
every other growing season.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment remedies the anticompetitive effects of 
the merger by requiring Bayer to divest its businesses in each relevant 
market, along with various supporting assets, to BASF, a global 
chemical company with an existing agricultural crop protection 
business. To ensure that BASF would replace Bayer as an effective 
competitor and innovator in each of the 17 markets in which the 
Complaint alleges that the proposed merger would harm competition, the 
United States carefully scrutinized the merging parties' and BASF's 
businesses and operations to identify a comprehensive package of 
businesses and supporting assets for divestiture. Collectively, these 
transfers encompass the suite of businesses and assets that constitute 
the divestiture package.
    In evaluating the remedy, the United States recognized that fully 
preventing the competitive effects of a merger in some cases requires 
the inclusion of assets or projects that are beyond the affected 
relevant markets. As the U.S. Department of Justice Antitrust Division 
Policy Guide to Merger Remedies explains, the United States will 
exercise its enforcement discretion to accept a divestiture only when 
it is persuaded that the divested ``assets will create a viable entity 
that will effectively preserve competition.'' See Antitrust Division 
Policy Guide to Merger Remedies at 9 (June 2011) (available at https://www.justice.gov/atr/public/guidelines/272350.pdf). Because Bayer does 
not operate its businesses that compete with Monsanto as separate, 
standalone entities, to ensure effective relief the United States is 
also requiring the divestiture of assets that are complementary to the 
competitive products or that use shared resources. See id. at 11 
(``[I]ntegrated firms can provide scale and scope economies that a 
purchaser may not be able to achieve by obtaining only those assets 
related to the relevant product(s).''). Finally, effective relief also 
requires divestiture of those ``pipeline'' research projects that Bayer 
is pursuing to ensure the future competitive significance of the 
divested businesses.
    Guided by these principles, the United States identified a 
divestiture package that remedies the various dimensions of harm 
threatened by the proposed merger. First, the proposed Final Judgment 
requires Bayer to divest those businesses that vigorously compete head-
to-head with Monsanto today. Second, to address certain vertical 
concerns, the proposed Final Judgment requires Bayer to divest seed 
treatment businesses that would give the combined company the incentive 
and ability to harm competition by raising the prices it charges rival 
seed companies. Third, because Bayer and Monsanto compete to develop 
new products and services for farmers, the

[[Page 27675]]

proposed Final Judgment requires the divestiture of associated 
intellectual property and research capabilities, including ``pipeline'' 
projects, to enable BASF to replace Bayer as a leading innovator in the 
relevant markets. Fourth, the proposed Final Judgment requires the 
divestiture of additional assets that will give BASF the scale and 
scope to compete effectively today and in the future.
    Because many of the divested assets will be separated from Bayer's 
existing business units and incorporated into BASF, the proposed Final 
Judgment includes provisions aimed at ensuring that the assets are 
handed off in a seamless and efficient manner. To that end, Bayer is 
required to transfer existing third-party agreements and customer 
information to BASF, as well as to enter transition services agreements 
that ensure that BASF can continue to serve customers immediately upon 
completion of the divestitures. The transition services and interim 
supply agreements are time-limited to ensure that BASF will become 
fully independent of Bayer as soon as practicable. The proposed Final 
Judgment also requires Bayer to warrant that the assets being divested 
are sufficient for BASF to maintain the viability and competitiveness 
of the divested businesses following BASF's acquisition of the assets. 
In addition, it gives BASF a one-year window after closing to identify 
any additional assets that are reasonably necessary to ensure the 
continued competitiveness of the divested businesses. The United States 
will have the sole discretion to determine if Bayer must divest these 
additional assets. Finally, the proposed Final Judgment gives BASF the 
ability to hire all of the personnel from Bayer needed to support these 
businesses.
    BASF is the only buyer the United States has evaluated and deemed 
suitable to resolve the range of competitive concerns raised by the 
merger. BASF already has extensive agricultural experience, but it 
lacks a seeds and traits business. Combining the businesses and assets 
being divested with BASF's existing portfolio will allow it to become 
an integrated player and an effective industry competitor to the merged 
company and the other integrated players. BASF will have full control 
over these divested businesses, including the ability to assign 
licenses and other rights.
    In sum, the proposed remedies will ensure that BASF can step into 
Bayer's shoes, thereby preserving the competition that the merger would 
otherwise destroy. The monitoring trustee to be appointed will have 
close oversight over the divestitures to ensure they proceed 
efficiently (see, infra, Section III.H). And, as additional protection, 
the proposed Final Judgment includes robust mechanisms that will allow 
the United States and the Court to monitor the effectiveness of the 
relief and to enforce compliance.

A. GM Seeds and Traits

    Section IV of the proposed Final Judgment requires Bayer to divest 
all assets used by Bayer's GM seeds and traits businesses in the United 
States, including Bayer's cotton, canola, and soybean seeds and traits 
businesses, as well as almost all of the assets associated with Bayer's 
other global GM seeds and traits businesses. Because Bayer and Monsanto 
are currently competing to introduce the next blockbuster trait or 
plant variety, BASF can replace Bayer as a competitor only if BASF 
obtains all the assets required to continue Bayer's legacy of 
innovation. This includes all assets needed to offer farmers the new 
products that Bayer was poised to commercialize in the coming years. 
Notably, BASF will receive all of Bayer's trait research centers 
(including facilities in Morrisville, North Carolina; Ghent, Belgium; 
and Astene, Belgium). The proposed Final Judgment also requires Bayer 
to transfer all intangible assets used by these businesses, such as 
patents, know-how, and licenses or permits issued by government 
agencies.
    There are limited exceptions to Bayer's obligation to divest all of 
the assets used by its global GM seeds and traits businesses. Certain 
assets used exclusively to support a handful of Bayer's small seed 
businesses or research programs outside of the United States are 
excluded from the Divestiture Assets. These exceptions are related to 
(1) rice seed, which Bayer sells only in Asia; (2) Bayer's millet, 
mustard, and cotton seed businesses in India; (3) R&D programs for 
Brazilian sugarcane and European sugarbeets; and (4) Bayer's cotton 
seed business in South Africa. None of these is closely related to the 
divested U.S. seeds and traits businesses. Bayer will also retain a 
number of general office facilities that house employees of businesses 
not affected by the divestitures, as well as one seed cleaning and 
bagging facility in Germany that is part of Bayer's Crop Science 
headquarters.
    The proposed Final Judgment also requires Bayer to provide BASF 
with certain complementary assets, which will give scale and scope 
benefits to the divested GM seeds and traits businesses, and supply 
agreements, which will allow BASF to maintain the competitiveness of 
those businesses as they are transitioned from Bayer.
    First, the proposed Final Judgment requires divestiture of Bayer's 
R&D programs associated with wheat. Bayer does not currently sell wheat 
in the United States, but it has been pursuing wheat-related research 
to expand the scope of its global seeds and traits portfolio and 
sustain the level of R&D investment these businesses require. Because 
seed and trait innovations can often be applied across multiple crops, 
a broader seed and trait portfolio will provide the promise of higher 
returns on investment and increase the incentive to innovate. The 
proposed Final Judgment preserves the scope efficiencies that Bayer 
enjoys today by keeping these businesses together. Moreover, separating 
the wheat business from Bayer's other seeds and traits businesses would 
have required disentangling and dividing integrated operations and 
assets. For instance, Bayer's research facility in Ghent, Belgium is 
used to support R&D for wheat as well as other crops. By requiring the 
divestiture of Bayer's wheat R&D programs and related facilities, the 
proposed Final Judgment ensures that BASF has all of the tools needed 
to run the divested businesses and can leverage these common resources 
as effectively as Bayer does today.
    Second, under Paragraph IV.G of the proposed Final Judgment, Bayer 
will supply BASF with the seed treatments Bayer currently applies to 
its row crop seeds for a period of up to two years, with extensions 
subject to approval by the United States. This will allow BASF to offer 
farmers the same combinations of seeds and seed treatments that Bayer 
offers today without interruption. During the term of these supply 
agreements, BASF will transition to using (1) its own seed treatments, 
(2) the seed treatments it is acquiring from Bayer pursuant to the 
proposed Final Judgment (discussed in more detail below), (3) seed 
treatments from alternate suppliers, or (4) a combination thereof.
    Third, Paragraph IV.N of the proposed Final Judgment requires Bayer 
to divest certain groups of Monsanto soybeans used for research and 
breeding (referred to in the industry as ``germplasm''). As discussed 
in the Complaint, Bayer has aggressively challenged Monsanto in the 
soybean market, and planned to continue to expand. However, Bayer 
currently lacks soybeans suitable for the Midwest, an important soybean 
growing region in the United States. By providing BASF with a richer 
pool of genetic material, the proposed Final Judgment creates a strong 
incentive for

[[Page 27676]]

BASF to continue Bayer's efforts to disrupt the market and provide new 
benefits to farmers and consumers.

B. Foundational Herbicides

    Section IV of the proposed Final Judgment also requires Bayer to 
divest assets relating to its foundational herbicides business. The 
proposed Final Judgment requires Bayer to divest all intellectual 
property related to glufosinate, the active ingredient in Bayer's 
Liberty herbicide, including intellectual property relating to mixtures 
of glufosinate with other chemicals. Bayer is also required to divest 
its R&D projects, which will incentivize BASF to continue to develop 
new innovations for farmers.
    In addition, Bayer will be required to divest all facilities used 
to manufacture glufosinate. Bayer will also divest certain facilities 
used to ``formulate'' (i.e., mix with water and other inactive 
ingredients) and package glufosinate to create Liberty for sale to 
customers. Specifically, the proposed Final Judgment requires Bayer to 
divest its large North American facilities in Regina, Canada and 
Muskegon, Michigan, which formulate and package a significant 
percentage of the Liberty sold in the United States. Because Bayer's 
global formulation facilities are also used for unrelated products not 
being divested and supply very little of the Liberty used in the United 
States, the proposed Final Judgment permits Bayer to retain some 
formulation facilities, most of which are located outside the United 
States. However, Paragraph IV.G of the proposed Final Judgment requires 
Bayer to enter into an agreement to formulate Liberty for BASF, at 
cost, for up to three years to ensure that BASF can meet farmer demand 
for the product during the transition. The proposed Final Judgment 
limits the duration of these formulation services to ensure that BASF 
will become fully independent of Bayer as soon as practicable.
    In certain countries outside of the United States, the proposed 
Final Judgment also provides that Bayer will distribute glufosinate 
products on BASF's behalf for a limited period. This accommodation 
affects only a small portion of total glufosinate sales and ensures 
business continuity in those international jurisdictions in which BASF 
requires time to develop the business infrastructure or to secure the 
local regulatory authorizations necessary to sell the product. To 
encourage BASF to become fully independent from Bayer as soon as 
practicable, the proposed Final Judgment limits the duration of these 
services, and BASF can terminate these distribution contracts on a 
country-by-country basis as soon as it is able to distribute these 
products on its own.

C. Pipeline Herbicides

    The proposed Final Judgment requires the divestiture of certain 
crop protection products that are complementary to Bayer's trait 
business. Today, Bayer engages in parallel research across its various 
seeds and crop protection businesses, developing new herbicides and new 
traits that confer tolerance to those herbicides. Bayer is motivated to 
pursue trait research in part because successful commercialization of a 
trait will generate additional returns through the sale of the 
associated herbicide, and vice versa. Therefore, Section IV of the 
proposed Final Judgment also requires Bayer to divest its R&D projects 
relating to ketoenole and N,O-chelator (``NOC'') herbicides. These 
herbicides, if successful, would be sold in conjunction with the 
ketoenole- and NOC-tolerant traits Bayer is developing, which also are 
being divested. By requiring divestiture of both the trait projects and 
the associated herbicide projects, the proposed Final Judgment 
preserves BASF's incentive to pursue these innovations.
    The proposed Final Judgment also provides BASF full access to 
Bayer's Balance Bean herbicide. Bayer recently introduced BalanceGT 
soybeans, which contain a GM trait conveying tolerance to both 
glyphosate and isoxaflutole, a selective herbicide contained in Bayer's 
Balance Bean product. BalanceGT soybeans are poised to compete with 
Monsanto's herbicide-tolerant soybeans, but Balance Bean is not yet 
approved for spraying over the top of crops. The proposed Final 
Judgment requires Bayer to transfer intellectual property associated 
with its Balance Bean herbicide business to BASF; Paragraph IV.G gives 
BASF the option of entering a temporary isoxaflutole supply agreement 
with Bayer; and Paragraph IV.L commits Bayer to using best efforts to 
obtain the remaining regulatory approvals for use of isoxaflutole over 
the top of crops. These requirements ensure that BASF will have the 
same ability to offer farmers the combination of both the BalanceGT 
trait and the Balance Bean herbicide as Bayer would have if the merger 
had not occurred.

D. Seed Treatments

    Section IV of the proposed Final Judgment also requires Bayer to 
divest assets relating to its seed treatment businesses. Collectively, 
these divestitures remedy the likely anticompetitive effects of the 
merger that would arise both from the horizontal combination of Bayer's 
and Monsanto's nematicidal seed treatments, as well as from the 
vertical integration of Bayer's dominant seed treatments and Monsanto's 
dominant seed businesses.
    First, the proposed Final Judgment requires Bayer to divest all 
intellectual property associated with its Poncho, VOTiVO, and TWO.0 
seed treatment brands. The Complaint alleges that the merged firm could 
use its control over Poncho, which is uniquely effective against corn 
rootworm, to disadvantage its corn seed rivals and diminish competition 
in the GM corn seed market. VOTiVO is an important nematicidal seed 
treatment for corn, soy, and cotton, and in combination with other 
divestitures described below, its divestiture to BASF remedies the 
merger's likely harm in the market for nematicidal seed treatments. 
Because VOTiVO and TWO.0 are each typically sold in combination with 
Poncho, divestiture of the intellectual property associated with all 
three products will allow BASF to offer American farmers the same 
packages of Poncho-branded seed treatments as Bayer does today.
    The proposed Final Judgment also requires Bayer to divest 
intellectual property associated with its ILeVO and COPeO seed 
treatments, which are both based on the same active ingredient, 
fluopyram. ILeVO and COPeO protect soybeans and cotton seeds, 
respectively, from nematodes; ILeVO is also the first seed treatment to 
combat soybean SDS effectively. The ILeVO and COPeO divestitures, in 
combination with the divestiture of VOTiVO, will address the merger's 
likely harm in the markets for nematicidal seed treatments. The 
divestiture of ILeVO will also prevent Bayer from using its control 
over ILeVO to disadvantage Monsanto's soybean seed rivals and diminish 
competition in the market for GM soybean seeds, as alleged in the 
Complaint.
    Bayer also will transfer all intellectual property used by these 
divested seed treatment businesses, including all patents, licenses, 
know-how, trade names, and data or information collected on the 
products. The only exception is patents related to fluopyram, which 
Bayer primarily uses in other non-seed treatment products, such as 
fungicides applied to foliage. Therefore, the proposed Final Judgment 
requires Bayer to provide BASF with a perpetual, royalty-free license 
for all patents related to the use of fluopyram in seed treatments. The 
proposed Final Judgment also requires Bayer to divest all R&D projects 
associated with these seed treatment products, as well as a

[[Page 27677]]

product in development that would expand and improve on these existing 
seed treatment businesses.
    Paragraph IV.G of the proposed Final Judgment requires Bayer, at 
BASF's option, to toll manufacture the active ingredients used in the 
divested seed treatments for an initial period of up to two years, and 
to provide formulation and distribution services for the seed 
treatments for up to two years. With prior approval of the United 
States, certain of these arrangements may be extended for up to an 
additional four years. These agreements ensure that BASF can 
immediately replace Bayer as an effective competitor with the divested 
seed treatments. BASF has its own existing seed treatment businesses 
and will use the time under the agreements to prepare its own 
facilities to manufacture and distribute the seed treatments, or to 
arrange for other suppliers to do so.

E. Digital Agriculture

    Section IV of the proposed Final Judgment also requires Bayer to 
divest its digital agriculture business to BASF. Currently, the leading 
global agricultural businesses project that the industry will move 
toward ``integrated solutions,'' which are combinations of traditional 
agricultural input products that are optimized for use with one another 
or combined with other services. These companies have described digital 
agriculture as the ``glue'' that binds the products together and the 
core of any future integrated solution. This trend has led them to 
develop digital agriculture products to protect their position in 
traditional agricultural markets, including GM seed markets. To provide 
BASF with the digital agriculture capabilities needed to replace Bayer 
as a competitor going forward, the proposed Final Judgment requires 
Bayer to divest all assets related to its digital agriculture portfolio 
and pipeline of products.

F. Vegetables

    Finally, Section IV of the proposed Final Judgment requires Bayer 
to divest a comprehensive set of tangible and intangible assets 
representing Bayer's entire global vegetable seed business. Bayer's 
vegetable seed business operates under the Nunhems brand name, a 
business acquired by Bayer in 2002.
    The assets to be divested include all of Bayer's vegetable seed 
breeding capabilities, which encompass 24 different crops (including 
tomatoes, onions, carrots, cucumbers, and watermelons, among others) 
and approximately 2,400 varieties. Additional assets to be divested 
include Bayer's worldwide headquarters in Nunhem, Netherlands, and all 
global R&D facilities, sales offices, and operations centers. This will 
provide BASF with the necessary assets and infrastructure to continue 
vigorously competing, innovating, and developing new vegetable 
varieties. All customer information, including lists, accounts, and 
credit records will also be transferred to ensure that existing 
customers receive uninterrupted service.
    Bayer also will divest intangible assets currently used by the 
vegetable seed business. Critically, all intellectual property--
including patents, licenses, and copyrights--will be transferred to 
BASF. In addition, BASF will receive research data relating to historic 
and current R&D efforts. These divestitures will allow BASF to develop 
new and innovative vegetable seeds for current and future customers.

G. Employees

    As part of the divestitures, over four thousand Bayer employees who 
currently support the various divestiture businesses will become BASF 
employees. These employees will immediately bring critical business 
experience to BASF. As an added safeguard, Paragraph IV.E of the 
proposed Final Judgment provides BASF the right to hire additional 
personnel to ensure that BASF can become as effective a competitor and 
innovator as Bayer is today in each of the relevant markets. Bayer is 
required to make information available to BASF about the employees 
supporting the businesses and assets to be divested, subject to 
applicable privacy and confidentiality protections. BASF then will have 
the right to make offers of employment to these individuals. To ensure 
that BASF will have the ability to hire experienced personnel, the 
proposed Final Judgment prohibits Bayer from interfering with BASF's 
efforts to hire any Bayer or Monsanto employees with relevant 
expertise.

H. Monitoring Trustee

    Section VIII of the proposed Final Judgment provides the United 
States the option to seek the appointment of a Monitoring Trustee 
subject to the Court's approval. The United States intends to recommend 
a trustee for the Court's approval. The person selected will have the 
necessary expertise and experience to ensure that competition continues 
unabated across the various markets. Given the scope of the required 
divestitures, it is critical that the trustee be in a position to 
review and resolve any issues that may arise beginning immediately 
after the divestitures are completed.
    The Monitoring Trustee will ensure: (1) that Defendants 
expeditiously comply with all of their obligations and perform all of 
their responsibilities under the proposed Final Judgment and the 
Stipulation and Order, (2) that the Divestiture Assets remain 
economically viable, competitive, and ongoing businesses prior to being 
fully divested to BASF, and (3) that competition in the relevant 
businesses is maintained throughout the United States. The Monitoring 
Trustee will have the power and authority to monitor the Defendants' 
compliance with the terms of the proposed Final Judgment. The 
Monitoring Trustee also will have the authority to investigate 
complaints relating to Bayer and Monsanto's compliance with the 
proposed Final Judgment including, but not limited to, any complaints 
relating to the agreements Bayer and Monsanto have or will enter into 
with BASF. The Monitoring Trustee will have access to all personnel, 
books, records, and information necessary to monitor Defendants' 
compliance with the proposed Final Judgment, and will serve at the cost 
and expense of Bayer.
    The Monitoring Trustee will file reports every 30 days with the 
United States and, as appropriate, the Court until the completion of 
the required divestitures. The reports will set forth the efforts by 
Bayer and Monsanto to comply with their obligations under the proposed 
Final Judgment and the Stipulation and Order. After completion of the 
divestitures, the Monitoring Trustee will provide reports as requested 
by the United States.

I. Firewall

    Section IX of the proposed Final Judgment requires Bayer and BASF 
to implement firewall procedures to prevent each company's confidential 
business information from being used by the other for any purpose that 
could harm competition. Within twenty days of the Court approving the 
Stipulation and Order, Bayer and Monsanto must submit their planned 
procedures for maintaining firewalls. Additionally, Bayer and BASF must 
explain the requirements of the firewalls to certain officers and other 
business personnel responsible for the commercial relationships between 
the two companies about the required treatment of confidential business 
information. Bayer's and BASF's adherence to these procedures is 
subject to a semi-annual audit by the Monitoring Trustee. These 
measures are necessary to ensure that the supply and transition 
services

[[Page 27678]]

agreements between Bayer and BASF do not facilitate coordination or 
other anticompetitive behavior during the interim period before BASF 
becomes fully independent of Bayer.

J. Prohibition on Recombinations

    To ensure that BASF and Bayer remain independent competitors, 
Section XI of the proposed Final Judgment prohibits Bayer and BASF from 
recombining any of the Divestiture Assets with competing Bayer 
businesses. First, Bayer is prohibited from reacquiring any of the 
Divestiture Assets during the term of the Final Judgment. Second, BASF 
may not acquire from Bayer any assets or businesses that compete with 
the Divestiture Assets. These provisions ensure that Bayer and BASF 
cannot undermine the purpose of the proposed Final Judgment by later 
entering into a new transaction that would reduce the competition that 
the divestitures have preserved. Finally, Section XI prohibits Bayer 
and BASF from entering into any new collaboration, such as a research 
and development joint venture, or from expanding the scope of any 
existing collaboration, involving the Divestiture Assets. This 
provision prevents Bayer and BASF from circumventing the purpose of the 
proposed Final Judgment by, for example, entering into a partnership to 
jointly develop new traits, which could reduce or eliminate BASF's 
incentive to innovate independently in some or all of the relevant 
markets. The provision permits BASF and Bayer to engage in certain 
ordinary-course-of-business commercial relationships, such as crop 
protection product supply agreements. They also may engage in other 
collaborations if approved by the United States in its sole discretion.

K. Enforcement Provisions

    The proposed Final Judgment contains provisions designed to promote 
compliance and make the enforcement of consent decrees as effective as 
possible. As set forth in the Stipulation and Order, BASF has agreed to 
be joined to this action for purposes of the divestiture. Including 
BASF is appropriate because, after extensive analysis, the United 
States has determined that BASF is a necessary party to effectuate 
complete relief; the divestiture package was crafted specifically 
taking into consideration BASF's existing assets and capabilities, and 
divesting the package to another purchaser would not preserve 
competition. Thus, as discussed above, the proposed Final Judgment 
imposes certain obligations on BASF to ensure that the divestitures 
take place expeditiously and that BASF and Bayer reduce entanglements 
as quickly as possible after BASF acquires the Divestiture Assets.
    Paragraph XIV.A provides that the United States retains and 
reserves all rights to enforce the provisions of the proposed Final 
Judgment, including rights to seek an order of contempt from the Court. 
Under the terms of this Paragraph, all Defendants, including BASF, have 
agreed that in any civil contempt action, any motion to show cause, or 
any other similar action brought by the United States regarding an 
alleged violation of the Final Judgment, the United States may 
establish the violation and the appropriateness of any remedy by a 
preponderance of the evidence, and that the Defendants have waived any 
argument that a different standard of proof should apply. This 
provision aligns the standard for compliance obligations with the 
standard of proof that applies to the underlying offense that the 
compliance commitments address.
    Paragraph XIV.B provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment was drafted to restore all competition that 
would otherwise be harmed by the merger. The Defendants agree that they 
will abide by the proposed Final Judgment, and that they may be held in 
contempt of this Court for failing to comply with any provision of the 
proposed Final Judgment that is stated specifically and in reasonable 
detail, as interpreted in light of this procompetitive purpose.
    Paragraph XIV.C of the proposed Final Judgment further provides 
that should the Court find in an enforcement proceeding that the 
Defendants have violated the Final Judgment, the United States may 
apply to the Court for a one-time extension of the Final Judgment, 
together with such other relief as may be appropriate. In addition, in 
order to compensate American taxpayers for any costs associated with 
the investigation and enforcement of violations of the proposed Final 
Judgment, Paragraph XIV.C provides that in any successful effort by the 
United States to enforce this Final Judgment against a Defendant, 
whether litigated or resolved prior to litigation, that Defendant 
agrees to reimburse the United States for attorneys' fees, experts' 
fees, or costs incurred in connection with any enforcement effort, 
including the investigation of the potential violation.
    Finally, Section XV of the proposed Final Judgment provides that 
the Final Judgment will expire ten years from the date of its entry, 
except that after six (6) years from the date of its entry, the Final 
Judgment may be terminated upon notice by the United States to the 
Court and Defendants that the divestitures have been completed and that 
the continuation of the Final Judgment is no longer necessary or in the 
public interest.

L. Stipulation and Order

    Bayer, Monsanto, and BASF have entered into the Stipulation and 
Order, which was filed with the Court at the same time as the 
Complaint, to ensure that, pending the divestitures, the Divestiture 
Assets are maintained such that the divestitures will be effective. The 
Stipulation and Order also requires Bayer to hold Monsanto as a 
separate entity until the divestitures are complete, so that the merger 
can be unwound if Bayer fails to complete the required divestitures to 
BASF. This step is necessary in this case because the divestiture 
package was crafted specifically taking into consideration BASF's 
existing assets and capabilities, and if BASF is unable to acquire the 
assets, simply divesting the package to another purchaser would not 
preserve competition. The Stipulation and Order also binds all three 
defendants to the terms of the proposed Final Judgment pending the 
Judgment's entry by the Court.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damages action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
Sec.  16(a), the proposed Final Judgment has no prima facie effect in 
any subsequent lawsuit that may be brought against Defendants.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.

[[Page 27679]]

    The APPA provides a period of at least 60 days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 60 
days of the date of publication of this Competitive Impact Statement in 
the Federal Register, or the last date of publication in a newspaper of 
the summary of this Competitive Impact Statement, whichever is later. 
All comments received during this period will be considered by the 
United States, which remains free to withdraw its consent to the 
proposed Final Judgment at any time prior to the Court's entry of 
judgment. The comments and the response of the United States will be 
filed with the Court. In addition, comments will be posted on the 
Antitrust Division's internet website and, in certain circumstances, 
published in the Federal Register.
    Written comments should be submitted by mail to:

Kathleen S. O'Neill
Chief, Transportation, Energy & Agriculture Section
Antitrust Division
United States Department of Justice
450 5th Street, NW, Suite 8000
Washington, DC 20530

    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any necessary or appropriate modification, interpretation, or 
enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The United States considered, as an alternative to the proposed 
Final Judgment, seeking preliminary and permanent injunctions against 
the merger and proceeding to a full trial on the merits. The United 
States is satisfied, however, that the relief in the proposed Final 
Judgment will preserve competition in each relevant market in the 
United States. Thus, the proposed Final Judgment will protect 
competition as effectively as, and will achieve all or substantially 
all of the relief the United States would have obtained through, 
litigation, but avoids the time, expense, and uncertainty of a full 
trial on the merits.

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  16(e)(1). In making such a 
determination, the court, in accordance with the statute as amended in 
2004, is required to consider:

(A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative 
remedies actually considered, whether its terms are ambiguous, and 
any other competitive considerations bearing upon the adequacy of 
such judgment that the court deems necessary to a determination of 
whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. Sec.  16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally 
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 15-17 (D.D.C. 
2007) (assessing public interest standard under the Tunney Act); United 
States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) 
(explaining that the ``court's inquiry is limited'' in Tunney Act 
settlements); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-
2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, 
(D.D.C. Aug. 11, 2009) (noting that the court's review of a consent 
judgment is limited and only inquires ``into whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanisms to enforce the final judgment are clear and 
manageable'').\2\
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    \2\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
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    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. Courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\3\ In 
determining whether a proposed settlement is in the public interest, a 
court ``must accord deference to the government's predictions about the 
efficacy of its remedies, and may not require that the remedies 
perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d 
at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting that a court 
should not reject the proposed remedies because it believes others are 
preferable); Microsoft, 56 F.3d at 1461 (noting the need for courts to 
be ``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland Co., 
272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant 
due respect to the United States' prediction as to the effect

[[Page 27680]]

of proposed remedies, its perception of the market structure, and its 
views of the nature of the case).
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    \3\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest' '').
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    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.''' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461)); United States v. 
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving 
the consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged.''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As a court in this district confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to make a mockery of judicial power.'' 489 F. Supp. 2d at 
15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 76 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). The language wrote into the statute what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Sen. Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\4\ A court can make its public 
interest determination based on the competitive impact statement and 
response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 76.
---------------------------------------------------------------------------

    \4\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
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VIII. DETERMINATIVE DOCUMENTS

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

    Dated: May 29, 2018

Respectfully Submitted,

Scott I. Fitzgerald
Robert A. Lepore
Katherine A. Celeste
Jeremy Evans (D.C. Bar #478097)

Attorneys for the United States

U.S. Department of Justice
Antitrust Division
450 5th Street, NW, Suite 8000
Washington, DC 20530
Tel.: (202) 353-3863
Fax: (202) 616-2441
E-mail: [email protected]

[FR Doc. 2018-12202 Filed 6-12-18; 8:45 am]
 BILLING CODE 4410-11-P