Bayer’s Roundup Settlement Hasn't Ended Its Troubles

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Bayer AG’s attempts at shutting down the litigation around its Roundup weed-killer are faltering. Maybe the German life sciences group will never be able to achieve a convincing degree of closure on this issue. If so, it would need to work out how it can function as a business against a backdrop of ongoing legal battles.

Last month Bayer hatched a settlement covering 75% of existing claims arguing that Roundup is carcinogenic. The agreements contained no admission of liability or wrongdoing, and the company has repeatedly asserted the product is safe when used as directed. Bayer also set aside cash to reach deals with the remaining current claimants. The figure for the total was between $8.8 billion and $9.6 billion. But the provision for settling with the holdouts isn’t clear, and investors cannot be 100% sure that the sum is really enough. 

Now there’s also a significant question mark over another piece of Bayer’s plan: a mechanism for tackling claims that might be made in the future.

Bayer is trying to prevent any future suits from being decided in jury trials. After all, juries that have heard cases so far have rejected the firm’s arguments. Bayer says the science supports the safety of Roundup. But trials involve scientific education, and juries have not been convinced. The company has lodged appeals in each of the three cases.

Chief Executive Officer Werner Baumann says decisions in the trials have been made on “a very small number of unreliable studies and dubious methodologies.” It cannot have helped Bayer’s credibility that Roundup was owned by Monsanto Co., which the German group acquired in 2018 and whose reputation is so bad that the name was dropped after the takeover.

The proposal is to convene a scientific panel to decide whether Roundup causes non-Hodgkin's lymphoma. The success of future claims would depend on the experts having concluded glyphosate, the active ingredient in Roundup, is a carcinogen, and the plaintiff proving exposure to a threshold level.

A U.S. district judge is currently questioning the legal basis of Bayer’s attempt to have scientists, rather than a jury, decide whether glyphosate causes cancer. Bayer says it takes the judge’s concerns seriously and will address them at a hearing later this month.

If the proposed mechanism for addressing future claims is blocked, it’s not clear what Bayer will do. Two weeks ago, the company’s head of litigation said a “plan B continues along the lines of respecting the full scientific development that has been happening.” That sounds like an aspiration rather than a plan.

Bayer’s shares are down 9% since confirmation of the settlement, as long-term investors continue to sit on the sidelines. The worry for shareholders, and the company as a whole, is a long-lasting drip-drip of damaging litigation-related publicity, chiseling away at Bayer’s standing with society and, potentially, with politicians and regulators.

Bayer may still be able to prevent that, but how, and at what cost, investors are still guessing. Closure remains elusive.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.

©2020 Bloomberg L.P.

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