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Pioneer Hi-Bred/Pannar Seed merger approved two years after deal announced

June 4, 2012

The South African Competition Appeal Court has approved the merger of Pioneer Hi-Bred and Pannar Seed Inc. almost two years after the deal was first announced.

Working on behalf of Pioneer with the law firms Crowell & Moring and Bowman Gilfillan, as well as South Africa-based economic consultancy Genesis Analytics, Bates White Partner Keith Waehrer and his team examined the unilateral and coordinated effects from the merger along with the effects of efficiencies on post-merger pricing. Dr. Waehrer ultimately testified before the South African Competition Tribunal on the proposed merger.

When the deal was initially blocked in December 2010 by the Competition Commission, the merging parties had suggested potential behavioral remedies. The Commission concluded that these conditions failed to address the “significant competitive harm” created by the merger. The matter was then considered by the South African Competition Tribunal. In October 2011, the Competition Tribunal, after a three-week evidentiary hearing, blocked the so-called “3 to 2” merger. The parties appealed the Tribunal’s decision to the Competition Appeal Court.

On May 28, 2012, the Competition Appeal Court approved the proposed merger, agreeing with the merging parties’ assessment that the transaction would strengthen competition in the market by promoting greater innovation in the development of new corn seed products. In its decision, the Court agreed with Dr. Waehrer’s opinion that the merger was unlikely to result in coordinated effects, and credited results from his simulation analysis, as well as a calculation balancing price effects and dynamic efficiencies arising from the merger, to support its conclusion. The Court added that earlier decisions by regulators constituted “anti-merger enforcement, stifling vigorous innovative competition that brings long-term benefits to consumers.”

“Dr. Waehrer’s thoughtful analysis and input throughout the process and his testimony at the hearing before the Tribunal were crucial to securing a favorable outcome for our clients,” said Crowell & Moring Partner Jeane Thomas. “We are very pleased with the results.”