Corteva, Syngenta Block Generics with “Loyalty Programs” Class Action

This antitrust class action alleges that a “loyalty program” has had anticompetitive effects in the market for crops protection products (CPPs), including herbicides, pesticides, and fungicides. The complaint names as manufacturer defendants Corteva, Inc., Syngenta Crop Protection AG, Syngenta Corp., and Syngenta Crop Protection, LLC; as co-conspirator defendatns CHS, Inc. and Nutrien Ag Solutions; and unnamed John Doe wholesalers and retailers.

The class for this action is all persons or entities in the US who bought CPPs containing rimsulfuron, oxamyl, or acetochlor, or CPPs containing azoxystrobin, mesotrione, metolachlor, or s-metolachlor, directly from CHS, Nutrien, or any other wholesaler or retailer that was subject to a loyalty program with Syngenta or Corteva, between at least as early as January 1, 2017 and the time when the anticompetitive conduct alleged has stopped.

Corteva and Syngenta make CPPs. For the first years of their sales, these products enjoy patent and regulatory protection, during which no other company can use the same formula in a CPP. When the patents expire, this protection ends, and other manufacturers enter the market with generic versions of such CPPs, which leads to lower prices for end users, which in this case are farmers.

However, the complaint alleges that, in this case, generics have been blocked from entering the market because of loyalty programs instituted by Corteva and Syngenta. Under these programs, the complaint alleges, Corteva and Syngenta make payments to wholesalers, and even some retailers, to limit their purchase of generic versions of their CPPs.

The complaint says this has prevented the widespread distribution of the generics and made sure that most of what farmers are able to buy are the more expensive branded versions of the CPPs rather than the cheaper generics.

What allows this to work? “Since a small number of wholesalers control a very large share of all sales of CPPs to retailers that sell to farmers, and some of the wholesalers also own a larger number of their own retail outlets,” the complaint alleges, a loyalty program for a given CPP “forecloses generic CPP manufacturers from nearly all of the retail market for that CPP.” It claims that CHS and Nutrien, which act as both wholesalers and retailers, took part in these loyalty programs.

When such a large portion of the retail market is closed to generic manufacturers in this way, the complaint claims, the remaining market is limited, and generic makers sell a smaller volume of their CPP or cannot sell it profitably, which pushes them out of the market.

The complaint claims that the manufacturer defendants get a near-monopoly on the market for their CPP, so that they can continue to charge high prices for their CPPs. Even the generic manufacturers must charge higher prices, the complaint alleges, meaning that farmers end up paying higher prices for all of the CPPs than they would pay in a competitive market.

Article Type: Lawsuit
Topic: Antitrust
Tags: Anticompetitive Actions, Antitrust, Requiring Consumer to Pay Higher Prices