Syngenta, Corteva “Loyalty Programs” Restrain Competition Class Action

Syngenta Crop Protection AG, Syngenta Corporation, Syngenta Crop Protection, LLC, and Corteva, Inc. are “basic” manufacturers of pesticides, meaning they invent, develop, and patent pesticides. When the patents expire, other manufacturers can make generic versions. But the complaint for this class action alleges that the companies use anticompetitive “loyalty programs” to curtail the amount of generic pesticides that can make it onto the market.

The class for this action is all persons or entities who, between January 1, 2017 and the present, bought pesticides in the US and its territories containing the active ingredients azoxystrobin, mesotrione, metolachlor, rimsulfuron, oxamyl, or acetochlor.

The loyalty programs are related to these key ingredients that are used in the pesticides to keep crops from being damaged by weeds, insects, and funghi. When the companies invent or develop new products using certain ingredients and formulas, they can patent them and be granted a period of exclusivity for that formula.

“Once the exclusivity period expires,” the complaint alleges, generic manufacturers may enter the market with equivalent products containing the same active ingredients and relying upon the same toxicology and environmental impact data.” The entry of generics to the market usually causes prices to fall.

The loyalty programs, the complaint alleges, “provide payments to distributors in exchange for selling certain amounts of [the companies’] pesticides and restricting sales of generic pesticides made by competing manufacturers.” The distributors agree to keep generics to only a certain percentage of their pesticide purchases and in return receive “rebate” payments from the companies.

The complaint claims the companies “implement and enforce these loyalty programs to ensure that manufacturers of generic pesticides are unable to effectively distribute their products, which preserves [the companies’] control of the market and prevents price competition.”

The programs are effective, the complaint alleges, because there are only a limited number of distributors in the market. The companies “both reward participation in their loyalty programs and punish non-compliance.” They design the loyalty programs so that the distributors make more money by taking the companies’ “rebate” payments than they would if they distributed more of the generic products.

According to the complaint, these loyalty programs have allowed the basic manufacturers to restrain competition, keep their monopolies going, and force farmers to pay more than they would have in an open and competitive market.

The complaint alleges that the Federal Trade Commission (FTC) and ten attorneys general have now filed a complaint against the companies for this anticompetitive scheme, which it says gives farmers “decreased innovation, fewer choices, and increased prices totaling many millions of dollars in overcharges” for the more expensive original products.

Article Type: Lawsuit
Topic: Antitrust
Tags: Anticompetitive Actions, Antitrust, Keeping Generics Off the Market