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Deere, Precision Planting Merger Faces Roadblock as Kinze Sues to Block Access to Internal Documents

The proposed acquisition of Precision Planting by Deere & Co. is facing another roadblock as Kinze Manufacturing, a rival of Deere’s, filed a motion to prevent the Department of Justice from having access to internal documents.

Deere and the Justice Department are seeking access to marketing, sales, and research and development documents from Kinze to determine whether its precision agriculture business provides enough competition to the proposed Deere-Precision Planting mashup. Attorneys for Kinze, the Williamsburg, Iowa-based maker of agricultural equipment, filed a motion in federal court to block access to what it likely considers trade secrets, the Des Moines Register reported.

The DOJ on August 31 filed a lawsuit to block Deere’s acquisition of Precision Planting from The Climate Corp., a subsidiary of Monsanto, saying the companies already own 86% of the high-speed precision planting market. The head-to-head competition between the companies has “directly benefitted farmers through aggressive discounts and promotions, lower prices, and innovative product offerings,” the department said.

Deere, however, has said there’s plenty of competition in the market, citing products from Kinze and other competitors. To prove its case, a Deere spokesperson said, the company and the DOJ need access to Kinze’s records. Case IH has provided information to the Justice Department, Deere said.

“Kinze is a major competitor to Deere, and that’s the core tenant of our case,” Beverly Flores, the manager of integrated communications for the intelligent solutions group at John Deere, told Agriculture.com. “Deere and the DOJ are seeking access to those documents because they’re at the heart of proving how competitive this market is.”

The case is currently in the discovery phase, a normal part of any legal action, she said. The court has said anything discovered from the Kinze documents will be seen only by “certain lawyers” in the case, Flores said.

Kinze isn’t involved in the Deere-Precision Planting transaction and seemingly doesn’t want to get involved, but it has offered a high-speed precision planter – the 4900 – since 2013.

The Kinze 4900 has an electric-driven meter, which can accurately seed at speeds up to 8 mph, according to Kinze. The John Deere and Precision Planting high-speed solutions also include electric-driven meters as well as a seed delivery system that replaces the traditional seed tube in row units, which is what the 4900 is equipped with. Advertisements for Deere’s ExactEmerge and Precision Planting’s vSet meter and SpeedTube touted planting speeds of 10 mph, planting speeds that are twice as fast.

“A seed tube is maximized for around 5 to 5½ mph. If you go faster, the seed will start bouncing in the seed tube,” said Kelby Krueger, John Deere, when John Deere’s ExactEmerge planter was first introduced. The key to higher speeds is that “you are always in control of the seed,” he adds. “That seed is being delivered all the way to the trench.”

‘Challenging Time’ for Farmers

The Department of Justice’s assertion that the Precision Planting acquisition by Deere will reduce competition and raise prices comes at a sensitive time for growers who are facing a tough economic situation. Crop prices have dropped in recent years, while the cost of inputs including seed and fertilizer stand fast.

The DOJ, in the suit it filed at the end of August, said that should Deere be allowed to purchase Precision Planting, farmers may see higher prices for precision agriculture equipment.

“If this deal were allowed to proceed, Deere would dominate the market for high-speed precision planting systems and be able to raise prices and slow innovation at the expense of American farmers who rely on these systems,” the department said.

Deere believes that even after the acquisition, should it be approved by anti-trust regulators, there will still be enough competition in the market that prices won’t rise, and agriculture producers will still have several options with regard to precision ag equipment.

The mashup between the companies will lead to innovation and new products that otherwise wouldn’t be available, said Flores, who expressed optimism that the transaction would be approved by the court. From a technological point of view, it’s an exciting time to be in agriculture, she said.

She acknowledged the low crop prices, saying it’s also a “challenging time” to be a farmer, but Deere feels that the acquisition of Precision Planting will give producers more tools to boost profitability.

“Farming is hard and complex – it takes a ton of decisions that have to be made on a daily basis,” she said. “We want to be able to take data from a farm level to an acre level to the plant level. That’s going to be driven by farmers as they look at what it wil take to help them become more productive and more profitable.”

Kinze declined to comment on the lawsuit or the company’s decision to file a motion.

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