Corteva, Syngenta Monopolized Crop-Protection Product Markets, Class Action Alleges

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A proposed class action claims two major crop-protection product (CPP) manufacturers have unlawfully suppressed competition from generic producers, which has artificially inflated CPP prices and cost U.S. farmers millions each year.

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The 84-page antitrust lawsuit alleges that a set of “loyalty programs” designed to strictly limit the availability of cheaper generic CPPs—and thus sustain higher market prices—have allowed Corteva, Inc. and the entities which do business as Syngenta to maintain monopolies well beyond the expiration of their legal exclusive rights to the products.

The alleged “anticompetitive scheme” extends to agricultural pesticides, herbicides and fungicides that contain the active ingredients rimsulfuron, oxamyl, acetochlor, azoxystrobin, mesotrione, metolachlor and s-metolachlor, the suit relays.

As “basic” manufacturers—that is, producers which develop CPPs that contain new active ingredients—Corteva and Syngenta previously had exclusive rights to their products for a 10-year period wherein they were legally protected from competition, the case explains. Typically, after the expiration of such exclusivity periods, generic manufacturers may begin selling equivalent products at substantially lower prices, which causes market prices to plummet for those CPPs, the complaint describes.

“This regulatory structure thus incentivizes innovation while encouraging price and other competition,” the filing says.

However, the lawsuit argues that the “loyalty programs” established by the defendants “systematically undermine and frustrate the goals of this system” and allow the companies to dominate the CPP markets long after their regulatory exclusivity periods have expired.

Like most manufacturers, Corteva and Syngenta sell their products directly to wholesalers, who in turn distribute the CPPs to retailers and then to the farmers themselves, the suit states. Under the “loyalty programs,” the companies allegedly make significant “loyalty” payments to their wholesalers, and sometimes retailers, at the end of each year on the condition that these distributors agree to severely limit their purchases of generic CPPs to a set percentage—usually 15 percent or less, the case summarizes.

The complaint contends that these “rebates” are merely a vehicle for Corteva and Syngenta to share their monopoly profits in order to “secure [wholesalers’] cooperation with the scheme” and thus continue to exclude generic competitors.

“In reality, however, these are exclusion payments to distributors,” the suit charges.

This has devastating effects on generic manufacturers, as a very small number of wholesalers control a large percentage of CPP sales to retailers and farmers, the filing claims. When wholesalers participate in such a “loyalty program,” the sale of generic products is extremely limited and often does not reap any profit at all—a reality that keeps many generic manufacturers away from these CPP markets in the first place, the lawsuit relays.

As a result of excluding most generic competition, Corteva and Syngenta are able to maintain much higher prices for their CPPs and make enormous profits, the suit says. U.S. farmers are also made to choose between expensive branded CPPs or often equally costly generic versions whose prices have been artificially inflated because of the restricted supply, the case adds.

Per the complaint, Corteva’s two “loyalty programs”—the Crops, Range & Pasture and Industrial Vegetation Management (CRPIVM) program and the Corporate Distributor Offer scheme—include CPPs using the active ingredients rimsulfuron, oxamyl and acetochlor. Syngenta’s equivalent Key AI loyalty program, which is offered to both wholesalers and retailers, includes CPPs that contain the active ingredients azoxystrobin, mesotrione, metolachlor and s-metolachlor, the filing explains.

To receive payments under Syngenta’s “loyalty program” in particular, wholesalers and retailers must sometimes limit their purchases of generic CPP products to as low as one percent of all annual purchases, the lawsuit charges.

As the suit tells it, if distributors fail to meet the terms of these agreements, Corteva and Syngenta are known to retaliate by voiding distribution contracts, delaying wholesalers’ access to new CPPs or withholding supply during product shortages.

The plaintiffs in this case have each purchased CPPs manufactured by Corteva or Syngenta at prices artificially inflated as a direct result of the companies’ “anticompetitive scheme,” the complaint alleges.

The lawsuit looks to represent all individuals or entities in the United States that purchased CPPs containing rimsulfuron, oxamyl, acetochlor, azoxystrobin, mesotrione, metolachlor or s-metolachlor that were manufactured by Corteva and/or Syngenta and purchased directly from any wholesaler or retailer subject to a loyalty program with the defendants since January 1, 2017.

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