Seed firms appeal ruling

Johannesburg - US-based multinational seed producer Pioneer Hi-Bred International and the locally based seed company, Pannar Seed, have filed appeal documents with the Competition Appeal Court in an attempt to set aside the Competition Tribunal's ruling which prohibits their merger deal.

In terms of the proposed tie-up, Pioneer would acquire control of Pannar. They are the second- and third-largest maize seed producers and suppliers in SA, respectively.

The only other significant player in this market is Monsanto SA. Thus the proposed merger would reduce the number of players in this market from three to two, the tribunal noted in its judgment on October 14.

But the seed companies insist compelling evidence was provided during the three-week hearing that the transaction would not be anticompetitive.

"We are committed to increasing agricultural productivity in SA and throughout Africa, and firmly believe this partnership would supply farmers with better seed products faster and more efficiently than either Pioneer or Pannar could do on its own," Pioneer president Paul Schickler said on Wednesday.

"Pannar has been a family-run business operating in Africa for more than 50 years," said Brian Corbishley, Pannar chairperson.

"We are keenly aware of the challenges facing small-scale and commercial farmers in SA and Africa, and are confident that this partnership would benefit our customers and our employees by bringing cutting-edge technology and additional research investment to SA."

The Competition Commission, which had initially assessed the intermediate merger, prohibited the transaction in December 2010 on the basis that it would substantially lessen competition in the local maize seed market.

Pioneer intended to expand the two businesses' existing SA research capabilities, making SA one of Pioneer's major research hubs outside the United States in addition to existing hubs in Brazil, China and India.