The Federal Trade Commission (FTC) and ten states collectively filed suit against defendants Syngenta Crop Protection AG, Syngenta Corporation, Syngenta Crop Protection, LLC, and Corteva, Inc. on Thursday in the Middle District of North Carolina. The complaint alleged that the defendants “unfairly impeded competitors and artificially inflated the prices that U.S. farmers pay for crop-protection products,” in violation of both state and federal laws.
It is common for U.S. farmers to purchase agricultural pesticides, the complaint says, which are regarded as vital farm inputs designed to improve crop yields and food security for populations in the United States. The plaintiffs allege that the defendants overcharge U.S. farmers millions of collective dollars through their loyalty programs, which the complaint describes as “unlawful exclusionary schemes.”
Defendants Corteva and Syngenta purportedly determine the payment of pesticide distributors on whether or not they limit business with competing pesticide manufacturers in an effort to cut off competition. This allows pesticide manufacturers to inflate their prices due to a lack of competition, the complaint says; American farmers then spend significantly more to obtain agricultural pesticides, which are integral to their success.
The alleged pay-to-block scheme also extends to their patents. New pesticides are patented, which prevents the defendants’ competitors from creating a generic version of the pesticide for 20 years. These patents allow companies like the defendants to set their own prices without generic versions of a pesticide driving the prices down. Further, when generic products do enter the market, Syngenta and Corteva make payments to distributors to ensure that there is little competition with their products, and they can maintain a large profit margin.
FTC Chair Lina M. Khan said of the lawsuit in an FTC press release, “The FTC is suing to stop Syngenta and Corteva from maintaining their monopolies through harmful tactics that have jacked up pesticide prices for farmers. By paying off distributors to block generic producers from the market, these giants have deprived farmers of cheaper and more innovative options.”
The FTC detailed that the scheme orchestrated by the defendants inflated prices for farmers and consumers and suppressed competition and innovation in the pesticide market. The complaint cites violation of the FTC Act, the Clayton Act, the Sherman Act, and various state laws. The plaintiffs are seeking favorable judgment on each count, a permanent injunction preventing further misconduct, equitable and monetary relief, civil penalties, and litigation fees.
