By Leisa Boley-Hellwarth
We live in a fractured society these days. Republicans hate Democrats. Democrats hate Republicans. The rancor of 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 attention. It is a true bi-partisan effort. Six of the states are led by Democrat 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 on Sept. 29, 2022, in the U.S. District Court in the Middle District of North Carolina. Let’s begin by identifying the parties.
• The Federal Trade Commission is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection.
• Attorneys general are the top legal officers of their state. They advise and represent their legislature and state agencies and act as the “People’s Lawyer” for the citizens of their state. Most are elected.
• Syngenta is a provider of agricultural science and technology, in particular seeds and pesticides, with its management headquarters in Basil, Switzerland. It is owned by ChemChina, a Chinese state-owned enterprise.
• Corteva is a major American agricultural chemical and seed company that was the agricultural unit of DowDuPont, prior to being spun off as an independent public company. Corteva is based in Indianapolis, Indiana.
Every year, U.S. farmers purchase over $10 billion in pesticides, a crucial input that improves crop yields and food security for everyone in this nation. FTC and the 10 attorneys general allege that every year U.S. farmers collectively pay many millions of dollars more than they should for these products because of Syngenta and Corteva’s “loyalty programs,” which function as unlawful exclusionary schemes. Both companies design these programs to exclude and marginalize competitive generic products, even after relevant patent and regulatory exclusivity periods expire to maintain excessive supracompetitive prices. The complaint seeks to end these “loyalty programs” and restore competition in 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 those patent protections expire, generic manufacturers may enter the market with products with the same active ingredients and relying on the same toxicology and environmental impact studies. This competition ordinarily leads to dramatic price reductions, benefiting farmers and thereby consumers.
According to the 91-page complaint, Syngenta and Corteva are undermining this system by paying incentive 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 complaint’s primary focuses are Syngenta active ingredients azoxystrobin, mesotrione and metolachlor and Corteva active ingredients rimsulfuron, oxamyl and acetochlor. Azozystrobin is a fungicide. Mesotrione, metolachlor, rimsulfuron and acetochlor are used as herbicides. Oxamyl is an insecticide and nematicide.
FTC and the states accuse the companies of violating the Federal Trade Commission Act and the Clayton Act. The companies’ conduct constitutes “deceptive and unfair practices.”
The FTC and States want the court to end the loyalty programs and grant equitable monetary relief which would include restitution for farmers in the states participating in the lawsuit. Syngenta strongly disagrees with the FTC’s complaint, which it believes is contrary to the facts and the law and is without merit.
Corteva believes there is “no basis” for the FTC’s complaint. Its customer marketing programs are “fully compliant” with the antitrust laws and are in fact pro-competitive programs that benefit both channel partners and farmers.
Antitrust or fully complaint competition? Disputes of fact are for the jury to determine. The FTC and states will have to prove the allegations by the preponderance of the evidence, a less strenuous standard than the criminal case’s “beyond a reasonable doubt.”
All I know for sure is that the FTC’s lawyers, the state’s lawyers, Syngenta’s lawyers and Corteva’s lawyers will make for a crowded courtroom and a well-dressed, respectable, yet vicious cat and dog fight.