FTC accuses two pesticide makers of ‘boxing out’ competitors
Two of the largest pesticide makers in the world, Syngenta and Corteva, illegally paid distributors to limit their business with competitors that made cheaper generic versions of their chemicals, so they could charge inflated prices to farmers, alleged the Federal Trade Commission and 10 state attorneys general in a lawsuit on Thursday.
“These unlawful practices have cost farmers many millions of dollars a year,” said the complaint filed in U.S. district court in Greensboro, North Carolina.
- READ MORE: Corteva Agriscience Now Stands on Its Own
Consumers were also affected, because higher input costs at the farm rippled through the food chain, said the FTC.
Syngenta, based in Switzerland, and Corteva, based in Indianapolis, ran so-called loyalty programs with distributors that kept their purchases of lower-priced generic pesticides at “very low” levels, said the FTC. “Boxing out” the competition allowed them to charge high prices for their products, so they had large profit margins despite the loyalty payments, it said.
“The FTC is suing to stop Syngenta and Corteva from maintaining their monopolies through harmful tactics that jacked up pesticide prices for farmers,” said FTC chair Lina Khan. “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.” FTC commissioners voted 4-0 to file suit. Commissioner Noah Phillips recused himself from the vote.
The 91-page lawsuit asks for permanent injunctions barring the companies from similar conduct pertaining to all crop protection products and active ingredients, as well as civil penalties, with the amount to be decided by the court.
“Through this scheme, defendants have suppressed generic competition and maintained monopolies long after their lawful exclusive rights to particular crop protection products have expired,” said the lawsuit. Growers spend more than $10 billion a year on pesticides, it said. “This law enforcement action seeks to end those ‘loyalty programs’ and restore competition in this vital sector of the economy.”
According to the lawsuit, Syngenta and Corteva maintained monopoly and market power over six active ingredients. For Syngenta, they were the fungicide azoxystrobin, sold as Amistar; the herbicides mesotrione, sold as Callisto; and metolachlor, sold as Dual Magnum. For Corteva, the active ingredients were the herbicides acetochlor, sold as Keystone; rimsulfuron, sold as Matrix; and the insecticide oxamyl, sold as Vydate. Some of the active ingredients were used for multiple products and trade names.
Joining in the lawsuit were the attorneys general of California, Colorado, Illinois, Iowa, Indiana, Minnesota, Nebraska, Oregon, Texas, and Wisconsin.
“Farmers are paying unnecessarily high prices for pesticides, on top of soaring costs for other inputs,” said Iowa’s attorney general, Tom Miller. Rob Bonta, attorney general of California, cited the impact on food prices. “Many California families are struggling to put food on the table as the cost of living continues to rise,” he said.