By Leisa Boley-Hellwarth
We live in a fractured society these days. Republicans hate Democrats. Democrats hate Republicans. The resentment of the discussion is worse than the interaction between my Border Collies and the barn cats. There seems to be little common ground, which is why a lawsuit filed by the Federal Trade Commission and 10 state attorneys general caught my eye. It is a truly bipartisan effort. Six of the states are led by Democratic governors: California; Colorado; Illinois; Minnesota; Oregon and Wisconsin. Four of the states are led by Republican governors: Indiana; Iowa; Nebraska and Texas.
The case was filed September 29, 2022 in the U.S. District Court for the Intermediate District of North Carolina. Let’s start by identifying the parts.
• The Federal Trade Commission is an independent agency of the United States government whose primary function is the enforcement of civil (not criminal) antitrust law and the promotion of consumer protection.
• Attorneys General are the best lawyers in their state. They advise and represent their legislature and state agencies and act as the “people’s advocate” for the citizens of their state. Most are elected.
• Syngenta is a supplier of agricultural science and technology, particularly seeds and pesticides, headquartered in Basil, Switzerland. It is owned by ChemChina, a Chinese state-owned company.
• Corteva is a major US agricultural chemicals and seeds company that was the agricultural unit of DowDuPont, before being transformed into an independent public company. Corteva is based in Indianapolis, Indiana.
Every year, American farmers buy more than $10 billion worth of pesticides, a crucial input that improves crop yields and food security for everyone in this country. The FTC and the 10 attorneys general allege that each year, American farmers collectively pay several million dollars more than they should for these products because of Syngenta and Corteva’s “loyalty programs”, which operate like illegal exclusions. Both companies design these programs to exclude and marginalize competing generic products, even after the relevant patent and regulatory exclusivity periods have expired, in order to maintain excessive supracompetitive prices. The complaint seeks to end these “loyalty programs” and restore competition to this vital sector of the economy.
Syngenta and Corteva develop, patent and register active ingredients in their products and exclusively promote their commercial potential for 20 years. After these patent protections expire, generic manufacturers can enter the market with products containing the same active ingredients and based on the same toxicology and environmental impact studies. This competition generally leads to dramatic price reductions, to the benefit of farmers and therefore consumers.
According to the 91-page complaint, Syngenta and Corteva are undermining that system by paying incentivized payments or “rebates” to distributors on one condition if they limit their purchases of comparable generic products. Distributors then sell the products with branded ingredients to retail outlets.
The main objects of the complaint are the active ingredients in Syngenta, azoxystrobin, mesotrione and metolachlor, and the active ingredients in Corteva, rimsulfuron, oxamyl and acetochlor. Azozystrobin is a fungicide. Mesotrione, metolachlor, rimsulfuron and acetochlor are used as herbicides. Oxamyl is an insecticide and a nematicide.
The FTC and the states accuse the companies of violating the Federal Trade Commission Act and the Clayton Act. The behavior of the companies constitutes “misleading and unfair practices”.
The FTC and the states want the court to end the loyalty programs and award fair monetary relief that would include restitution to farmers in the states participating in the lawsuit. Syngenta strongly disagrees with the FTC’s complaint, which it considers contrary to fact and law and without merit.
Corteva says there is “no merit” to the FTC’s complaint. Its customer marketing programs are “fully compliant” with antitrust laws and are in fact pro-competitive programs that benefit both distribution partners and farmers.
Antitrust Competition or All Complaint Based? Disputes of fact are to be decided by the jury. The FTC and states will have to prove the claims by a preponderance of the evidence, a lower standard than the criminal case “beyond a reasonable doubt.”
All I know for certain is that FTC attorneys, state attorneys, Syngenta attorneys and Corteva attorneys will make a crowded courtroom and a cat and dog fight well dressed, respectable, but vicious.