DOJ Shows Flexibility, Creativity in Settling Biotech Merger

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A recent settlement in a biotech merger case may signal a greater willingness by DOJ to accept remedy provisions it previously would have rejected, especially to resolve vertical issues in industries heavily dependent on intellectual property and innovation. Rather than challenge

Monsanto’s proposed acquisition of Delta and Pine Land Company, DOJ agreed to a settlement that departs from some of its traditional policies and practices regarding merger remedies. The announced remedy: (1) assembles a new competitor with a package of assets, tangible and

intangible, drawn from both merging parties; (2) contains both structural and conduct relief; (3)

contemplates divestitures to multiple third parties; (4) permits Monsanto to retain rights in divested

assets; and (5) contains a “crown jewel” provision.

On May 31, 2007, the Department of Justice announced a settlement that permits Monsanto Company to proceed with its proposed $1.5 billion acquisition of Delta and Pine Land Company (“DPL”). http://www.usdoj.gov/atr/cases/monsanto.htm Both companies are major competitors in the development, commercialization, and sale of “traited” cottonseeds in the southern United States, where most of the domestic cotton crop is grown. Together, DPL and Monsanto account for 95% of

the traited cottonseed sold in that region. Traited cottonseeds contain biotech traits that protect the

crop from damage from insects and weeds.

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