The US competition authority, the FTC, and ten state attorneys general have filed a complaint in federal court against Corteva Agriscience and Syngenta Crop Protection. They claim that the companies pay distributors to block competitors from selling their cheaper generic pesticides to farmers through "loyalty programmes". The filed complaint is with the US District Court for the Middle District of North Carolina.

Syngenta disputes the complaint, saying the "discount" programmes are "are part of a voluntary and industry-standard programme that has been in place for decades at Syngenta and other crop protection companies".

"The FTC is suing to stop Syngenta and Corteva from maintaining their monopolies through harmful tactics that have jacked up pesticide prices for farmers," the FTC's chair Lina Khan explains. "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."

The authority asserts that the companies have cut off competition, allowing them to inflate their prices and force US farmers. The complaint seeks to shut down "this illegal pay-to-block scheme" and restore competition to affected markets, the FTC adds.

Loyalty programmes

The FTC and co-litigants claim that Syngenta and Corteva protect sales of their products once they have lost patent protection by limiting the sales of generic competitors through distributors. The authority states that the businesses have set up "loyalty" programmes in which they make payments to distributors, but only if those distributors keep their purchases of competitor generic pesticides beneath a "very low threshold". The practice allows Corteva and Syngenta to maintain high prices and revenues, they add.

Syngenta says that its programme is only one of several incentives offered by the company in the US. "We are disappointed that the FTC has failed to appreciate the beneficial effects that these rebate programmes provide to our channel partners and to growers."

The move centres on six crop protection active ingredients. They are: Corteva's herbicides, acetochlor and rimsulfuron, and its insecticide/nematicide, oxamyl; and Syngenta's fungicide, azoxystrobin, and its herbicides, mesotrione and metolachlor.

The accusations claim violations of state and federal competition laws.

Posted 06 October 2022 by Robert Birkett, News Reporter, Agribusiness

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.