Understanding the role of agricultural data on market power in the emerging Digital Agriculture sector: A critical analysis of the Bayer/Monsanto decision

Abstract

With the advent of so-called ‘Digital Agriculture’ or ‘Smart Farming’, digitally-enabled data-driven agronomic solutions generate significant benefits for farmers. However, this data-driven transformation has also brought about competition law concerns. For instance, the European Commission reacted to inter alia the Digital Agriculture aspects of the Bayer/Monsanto merger by adopting remedies. This study aims to explore the fundamental drivers of data-driven market power in this nascent sector and discusses to what extent the Commission performed its analysis compatible with the sector realities. In particular, this chapter argues that switching costs deriving from legal and technical problems are the core reasons for the entry barriers. Additionally, lack of data substitutability due to the distinctive cross-dependency between farmers and companies exacerbates data-driven lock-ins. However, the Commission neglected them to a large extent. Building on this discussion, this piece points at possible required elements for an optimal market power test for this emerging sector.