Syngenta, Corteva “Loyalty Programs” Restrict Competition Class Action

This antitrust class action bring suit against Syngenta Crop Protection AG, Syngenta Corporation, Syngenta Crop Protection, LLC, and Corteva, Inc., alleging that they have instituted “loyalty programs” for distributors of their pesticides containing certain ingredients. The complaint alleges that the real purpose and effect of these loyalty programs is to restrict the sale of competing generic pesticides.

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

The loyalty programs pertain to pesticides containing these ingredients, the complaint alleges, under which the companies “provide payments to distributors in exchange for selling certain amounts of [their] pesticides and restricting sales of generic pesticides made by competing manufacturers.”

The complaint alleges that the companies enforce the terms of these 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 complaint alleges that the distributor do then “severely curtail sales of, and in some cases wholly refrain from selling, pesticides that compete with those manufactured by” the companies.

Makers of generic pesticides thus are unable to compete in the market, the complaint alleges: “As a result, farmers face decreased innovation, fewer choices, and increased prices totaling many millions of dollars in overcharges.”

According to the complaint, the pesticide industry is very similar to the pharmaceutical industry, since in both, the original developers and makers of products get patents which are good for a certain number of years, after which generics may enter the market and compete with the originals. The loyalty programs, which restrict the availability of generics, have come to the attention of the Federal Trade Commission (FTC) and ten state attorneys general.

An FTC investigation has shown that, in order to get the “rebate” payments the loyalty programs offer, the complaint alleges, “distributors and retailers must limit their purchases of generic pesticides to a set percentage.” The companies “both reward participation in their loyalty programs and punish” noncompliance. Because a limited number of distributors have control of the pesticide market, the loyalty programs have had a significant effect in repressing competition from generics.

On September 29, 2022, the FTC filed a complaint against the defendants in this case, claiming that the loyalty programs cut off competition, causing farmers to pay higher prices and violating federal and state antitrust laws.

The complaint for this class action claims that the companies “have restrained competition, maintained unlawful monopolies, and harmed America’s farmers, reducing choices for these farmers and costing them millions of dollars in overcharges.”

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