(Reuters) – German group Bayer AG (BAYGn.DE) has been blocked from selling its dicamba-based weed killer in the United States, the latest setback for a business that is already fighting an expensive legal battle over another of its products.
FILE PHOTO: A bridge is decorated with the logo of a Bayer AG, a German pharmaceutical and chemical maker in Wuppertal, Germany August 9, 2019. REUTERS/Wolfgang Rattay/File Photo
A three-judge panel ruled that the U.S. Environmental Protection Agency (EPA) substantially understated the risks related to the use of dicamba which is found in herbicides made by Bayer and its rivals.
Bayer inherited this and other lawsuits two years ago as a result of its $63 billion acquisition of Monsanto. It is facing separate allegations that its glyphosate-based weed killer Roundup causes cancer.
Environmental groups, which filed a lawsuit in 2018, wanted the court to force the EPA to cancel its approval of Monsanto’s dicamba-based XtendiMax product, arguing it not only harms nearby crops and plants but wildlife as well.
The ruling also blocks the selling of other dicamba-based herbicides such as BASF’s Engenia and Corteva Agriscience’s (CTVA.N) FeXapan.
Both Bayer and BASF (BASFn.DE) said they did not agree with the judgment issued on Wednesday.
Shares in Bayer traded 2.8% lower by 1415 GMT on Thursday, while BASF recovered after initial losses.
Bayer said the ruling relates to the EPA’s 2018 registration decision, which expires in December and it was working to obtain a new EPA registration for the weed killer for 2021 and beyond.
“Depending upon actions by the EPA and whether the ruling is successfully challenged, we will work quickly to minimize any impact on our customers this season,” Bayer said.
The EPA had imposed restrictions on the use of dicamba in November 2018 due to concerns about the potential damage to crops surrounding those it was being applied to.
Bernstein analyst Gunther Zechmann said the effect on dicamba volumes for next year’s planting season would be minor.
“The company has already made label adjustments, which has therefore made the court opinion moot,” he said in a note.
There could be 30 million euros in lost earnings until the EPA decides on the re-approval of dicamba beyond 2020 in about six weeks, the analyst added.
In February, Bayer had said it would appeal a U.S. jury’s $265 million damages award against it and BASF in favor of a Missouri farmer who said the company’s dicamba herbicide had destroyed his peach orchards.
Monsanto had dominated soybean sales since the 1990s with Roundup Ready, modified to withstand the weed-killer glyphosate.
Some weeds have since developed resistance to glyphosate due to overuse, however, raising the need for soy that can resist alternative herbicides.
Dicamba, introduced in the 1960s, has been known to evaporate easily and waft away from the targeted field but Bayer, Corteva and BASF have developed and launched new dicamba formulations that they claim address that problem when used according to the label.
Reporting by Sabahatjahan Contractor and Rama Venkat, additional reporting by Subrat Patnaik in Bengaluru and Patricia Weiss and Ludwig Burger in Frankfurt; Editing by Sherry Jacob-Phillips, Arun Koyyur and Keith Weir