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Group calls on DOJ to evaluate Monsanto, Delta and Pine Land deal

Agriculture.com Staff 12/12/2006 @ 12:11pm

The American Antitrust Institute (AAI) Tuesday called on the Department of Justice (DOJ) Antitrust Division to evaluate the competitive issues raised by Monsanto's proposed acquisition of Delta and Pine Land (D&PL).

The AAI noted the deal raises both competitive issues and broader public policy concerns associated with dominant firm control of an important agricultural supply chain. The white paper analyzes six major issues raised by the transaction, which include: vertical integration, closed "systems," potential competition, consumer choice, efficiencies and entry barriers, and up-front fixes.

"Even though the antitrust agencies have paid relatively little attention to vertical mergers or potential competition in recent years, we think the DOJ must carefully scrutinize these arguments," says AAI President Albert Foer.

The deal was announced in mid-August and is currently in the second-request stage at the DOJ. The transaction re-attempts an aborted 1998 merger between the same companies.

Diana Moss, AAI Vice President and Senior Fellow explained the acquisition would vertically integrate two large players -- one in the market for cotton traits (Monsanto), and one in the market for cotton seed (D&PL).

"This merger could enhance the ability and incentive of the combined entity to foreclose competitors from both the cotton traits and cotton seed markets," Moss said. "This would harm competition, innovation, and consumers, including farmers and U.S. buyers of cotton-based products -- from sheets, to baby clothes, to tee shirts."

Because Monsanto has proposed the up-front divestiture of its Stoneville cotton seed asset and a commitment to continue to license its commercial traits, a central question will be whether such a fix should be accepted as sufficient to maintain the degree of competition that existed before the acquisition. The AAI action raises doubts that the fix satisfactorily addresses all potential competitive questions.

"These commitments should be carefully evaluated and may not go nearly far enough, should the DOJ decide not to block the deal and instead come to terms with the parties," Moss added.

The American Antitrust Institute (AAI) Tuesday called on the Department of Justice (DOJ) Antitrust Division to evaluate the competitive issues raised by Monsanto's proposed acquisition of Delta and Pine Land (D&PL).

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