In recent developments, Bayer is seeking to navigate the complex legal landscape surrounding its acquisition of Monsanto, especially concerning the liabilities tied to Roundup herbicide. This article delves into Bayer’s struggle to manage the fallout from a controversial merger that many institutional investors viewed skeptically. Interestingly, the Trump Administration seems poised to lend support to Bayer, raising questions about the implications of such involvement and the motivations behind this legal backing.
Yves here. The article below describes how Bayer is attempting to escape the liabilities associated with Roundup herbicide, which it inherited when it purchased Monsanto. It’s puzzling to consider why the Trump Administration is aiding a large German corporation that knowingly engaged in what institutional investors have labeled the worst deal in history. A significant factor behind Bayer’s decision to acquire Monsanto was its vulnerability to potential takeover bids from pharmaceutical giants like Pfizer. Bayer aimed to fortify its position and become so large that it would be less vulnerable to acquisitions.
As we previously highlighted in our analyses of the litigation against Bayer’s executives, board members, and the investment bankers involved in the deal, Bayer was aware of the potential cancer liabilities linked to Roundup but chose to disregard them. They relied on studies that downplayed these risks, pressing forward with the acquisition even after the World Health Organization classified glyphosate, the main ingredient in Roundup, as probably carcinogenic to humans. Bayer’s leadership believed this classification was insufficient to expose them to legal consequences, a miscalculation that U.S. juries later disproved.
Bayer-Monsanto has supplanted AOL-Time Warner in most discussions as the “worst deal of all time.” Nearly every dollar of the $66 billion Bayer invested in Monsanto has vanished. Furthermore, Bayer is the first public company in Germany to receive a majority no-confidence vote from its shareholders. The company faces a seemingly endless torrent of Monsanto-related liability claims, with Roundup consistently taking center stage and overshadowing other significant litigation such as Dicamba. Unlike any other corporation facing similar challenges, Bayer has neither withdrawn Roundup from the market, reformed its formula, nor issued health warnings related to cancer. It appears that bankruptcy may be on the horizon for Bayer.
This situation drastically contrasts with AOL-Time Warner, which was initially viewed as a groundbreaking merger but quickly faltered following the dot-com bubble burst. From day one, analysts and shareholders criticized the Bayer-Monsanto merger, recognizing the growing consumer and expert concerns regarding glyphosate risks.
The merger proceeded for the least justifiable reasons: Bayer’s management sought to bolster its size to avert acquisition attempts, primarily to preserve their lucrative positions and status.
Monsanto remained the only significant target due to ongoing consolidation in the chemical and pharmaceutical sectors. Bayer, which boasted minimal debt, became an appealing prospect at a time when Pfizer’s bid for Allergan collapsed due to unfavorable tax rulings. The departure of respected CEO Marijn Dekkers, who had resisted the acquisition, marked a pivotal moment, leading to the pro-merger “two Werners”—Chairman Werner Wenning and recently appointed CEO Werner Baumann—taking the reins with the intent to finalize the deal.
However, they found themselves tethered to Bayer with a hefty $2 billion breakup fee. The company’s due diligence on Monsanto was inherently limited by antitrust regulations, prolonging assessments far beyond the usual duration due to their competitive relationship.
Despite emerging evidence strengthening claims regarding glyphosate’s dangers, Bayer chose to ignore these alarming trends, either out of stubbornness or ignorance, paving the way for a flood of lawsuits.
What negotiations led to the Trump Administration’s unexpected support for Bayer? While this may not influence the Supreme Court, the optics are questionable—favoring a corporate titan associated with harmful chemicals, raising additional concerns regarding the erosion of value within capitalist frameworks.
By Carey Gillam. Originally published at The New Lede
Bayer, facing extensive litigation over Roundup herbicide, recently gained support from the U.S. Department of Justice in its efforts to fend off numerous lawsuits from individuals claiming that the company failed to adequately warn them about the potential cancer risks associated with the product.
In a legal filing on December 1, Solicitor General D. John Sauer, appointed by the Trump administration in April, urged the Supreme Court to consider an appeal from Bayer that could potentially help resolve ongoing legal challenges tied to its 2018 acquisition of Monsanto.
Bayer asserts that its glyphosate herbicides are non-carcinogenic and maintains that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) preempts “failure-to-warn” claims against it. The company argues that, since the Environmental Protection Agency (EPA) has approved product labels free from cancer warnings, such claims should not be permissible.
Various courts, including two appellate courts, have rejected Bayer’s stance, determining that FIFRA does not inherently shield the company from failure-to-warn claims. However, a recent ruling from the Third Circuit Court of Appeals did favor Bayer.
Bayer’s earlier attempts to engage the Supreme Court on this preemption-related issue were dismissed in 2022, after the Biden administration’s Solicitor General advised against hearing Bayer’s appeal, emphasizing that “FIFRA does not preempt” these types of claims.
In a 2022 brief to the Supreme Court, then-Solicitor General Elizabeth Prelogar stated: “While certain aspects of EPA-approved labeling may preempt state-law requirements, the EPA’s approval of labels lacking warnings about specific chronic risks does not automatically preempt a state-law obligation to provide such warnings.” Agricultural industry stakeholders reacted with strong opposition, claiming that Prelogar’s stance posed significant risks to regulation and food security.
Conversely, Sauer’s recent brief closely aligns with Bayer’s position, asserting that the Third Circuit’s ruling on preemption “correctly allows EPA to determine the necessary warnings on pesticide labels to prevent unreasonable health risks.” He urged the Supreme Court to intervene given the conflicting rulings among courts.
Sauer also reiterated Bayer’s claims about Roundup’s safety, stating, “After an extensive scientific review and assessment of hundreds of thousands of public comments, EPA has consistently concluded that glyphosate is not likely to cause cancer in humans and has approved Roundup labels without cancer warnings.”
Bayer has already disbursed over $11 billion in jury verdicts and settlements but continues to face tens of thousands of lawsuits from individuals asserting they developed non-Hodgkin lymphoma due to using Roundup and other glyphosate-based products. The company has reiterated to investors that obtaining a favorable Supreme Court ruling on the preemption issue is a primary objective.
Bayer expressed gratitude for the administration’s support, issuing a statement that emphasized how a positive Supreme Court ruling could bring the company closer to resolving the Roundup litigation.
“The support from the U.S. Government represents a vital step and is promising news for American farmers in need of regulatory certainty,” stated Bayer CEO Bill Anderson. “The stakes are incredibly high, as the misapplication of federal law threatens the availability of innovative agricultural solutions and investment in the broader economy.”
Bayer also warned that a Supreme Court ruling on this issue could set precedents impacting other industries.
“It is crucial for the U.S. legal system to affirm that companies cannot be penalized under state laws while complying with federal label regulations,” Bayer asserted.
Kelly Ryerson, co-executive director of American Regeneration and a prominent lobbyist for the Make America Healthy Again (MAHA) movement endorsed by the Trump administration, expressed outrage at the Justice Department’s position.
“MAHA voters supported this administration because they were fed up with captured regulators approving chemicals harmful to their families, not to create liability protections for pesticide corporations,” Ryerson declared.
“President Trump explicitly promised to tackle pesticide-related harms. This move to support Bayer’s pursuit of federal preemption over state laws designed to protect our safety diverges drastically from the commitments he made to the American public,” she added.
The Roundup litigation commenced in 2015 following the International Agency for Research on Cancer, a World Health Organization affiliate, conducting a review of extensive independent research on glyphosate and Roundup, concluding that the herbicide is a “probable human carcinogen.”
In addition to its ongoing battles in court, Bayer has been actively advocating for new state and federal regulations that would effectively limit lawsuits claiming failure to provide warnings.
