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FTC, state attorneys general sue Syngenta and Corteva

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Complaint alleges rebates offered to distributors limit farmers from obtaining generic products at lower prices.

A bipartisan group of 10 states and the Federal Trade Commission filed a lawsuit September 29 against pesticide makers Syngenta and Corteva, alleging anticompetitive practices that have harmed farmers. The complaint accuses Syngenta and Corteva of undermining the benefits that come with generics once products’ protections expire by paying incentive payments, or “rebates,” to distributors on one condition: The distributor must keep its purchases of comparable generic products below a low threshold. 

The complaint, filed in U.S. District Court in the Middle District of North Carolina, accuses the defendants of using “loyalty programs” with pesticide distributors to exclude generic competitors from the market. The programs reward distributors for selling Syngenta and Corteva products long after their patent and other protections have expired, thus inflating prices. “These unlawful business practices have cost farmers many millions of dollars a year,” the complaint alleges. 

“The FTC is suing to stop Syngenta and Corteva from maintaining their monopolies through harmful tactics that have jacked up pesticide prices for farmers,” says FTC Chair Lina M. Khan. “By paying off distributors to block generic producers from the market, these giants have deprived farmers of cheaper and more innovative options. Our lawsuit in partnership with a bipartisan state coalition makes clear that we are united in our fight to stop abusive monopolies from squeezing America’s farmers.”

Iowa Attorney General Tom Miller’s office worked with the Illinois Attorney General’s Office to lead the states’ investigation. The lawsuit accuses Syngenta and Corteva of violating state and federal laws, including the FTC Act and the Clayton Act. The FTC and state attorneys general ask the court to end the loyalty programs, and grant equitable monetary relief and attorney fees, among other remedies. The relief would include restitution for farmers. 

The FTA contends that Syngenta and Corteva take steps to stop generic pesticides from eating into their monopoly profits, the complaint alleges. The companies set up “loyalty” programs in which they make payments to distributors—as long as the distributors keep their purchases of competing generic pesticides beneath a very low threshold.

“Under this scheme, Syngenta and Corteva make more money than they would if they had to compete fairly with generics. Boxing out the competition allows them to keep charging such high prices that, even after compensating the distributors, they can maintain a large profit margin. Distributors pass those high prices along to farmers. And those prices are ultimately passed on to consumers,” the FTC says in its release.

These loyalty programs enable the defendants to maintain high prices and dominant market positions years after exclusivity for an active ingredient has expired. They also have forced generic manufacturers out of the market, the lawsuit alleges. 

The FTC claims Syngenta has monopoly and market power in the United States with respect to azoxystrobin, a fungicide; and mesotrione and metolachlor, both herbicides. Corteva, meanwhile, has monopoly and market power in the United States with respect to the herbicide rimsulfuron and the insecticide and nematicide oxamyl. Corteva also has market power with respect to the herbicide acetochlor.

Syngenta and Corteva both believe the FTC has no basis for its lawsuit.

“As a US-based innovator of crop protection products, this case threatens the pro-competitive investments that Corteva makes and that growers rely on to protect America’s crops. We are confident that we will prevail in this litigation and that there is no basis for the FTC’s complaint,” says Kris Allen, Corteva external communications leader. “We will vigorously defend our position that Corteva’s customer marketing programs are fully compliant with the antitrust laws and are, in fact, pro-competitive programs that benefit both channel partners and farmers.”

Paul Minehart, Syngenta head of crop protection communications, says these discounts are part of a voluntary and industry-standard program that has been in place for decades at Syngenta and other crop protection companies.  

“Syngenta strongly disagrees with the FTC’s complaint, which it believes is contrary to the facts and the law and is without merit. This program is only one of several incentive programs offered by Syngenta in the US, and we are disappointed that the FTC has failed to appreciate the beneficial effects that these rebate programs provide to our channel partners and to growers,” Minehart says.

The FTC commissioners voted September 29 by a unanimous vote of 4-0-1, with Commissioner Noah Joshua Phillips recused, to pursue the lawsuit. In addition to Iowa, the lawsuit was joined by the attorneys general of California, Colorado, Illinois, Indiana, Minnesota, Nebraska, Oregon, Texas and Wisconsin.

The lawsuit also comes on the heels of a USDA announcement September 26 by Secretary of Agriculture Tom Vilsack offering $15 million to state attorneys general to increase collaboration with USDA on antitrust enforcement. The new partnerships that this funding will facilitate will assist state AGs in tackling anticompetitive practices in the agricultural sector and related industries that are contributing to heightened inflationary pressures, lack of choices for consumers and farmers, and conflicts of interest and anticompetitive barriers across the food and agriculture supply chains.

The FTC says it’s complaint is also “part of a broader push to unlock competition and innovation in the American economy, protect consumers and small businesses, and crack down on unfair tactics by dominant companies.” 

TAGS: Regulatory
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