LINCOLN, Neb. (DTN) -- Two farmers are seeking damages in separate class-action lawsuits filed against Syngenta Crop Protection and Corteva Inc., alleging the companies pay distributors to block competitors from selling less-expensive generic pesticides and other products to farmers.
The Federal Trade Commission and attorneys general from 10 states sued the companies at the end of September, alleging they run so-called "loyalty programs" in which distributors only get paid if they limit business with competing manufacturers.
Following the FTC lawsuit in the U.S. District Court for the District of Middle North Carolina, Jackson County-Illinois-farmer Charles Anderson and Chautauqua County-New York-farmer Frederick C. Croscut filed identical class-action lawsuits in the same court.
Both farmers are seeking a jury trial on alleged anti-trust violations including conspiracy to restrain trade, monopolization, violation of state anti-trust laws, state consumer-protection laws and unjust enrichment.
Syngenta and Corteva are two of the largest pesticide manufacturers operating in the United States. Syngenta, based in Switzerland, is a subsidiary of a Chinese state-owned company. Corteva, headquartered in Indianapolis, is the company formed as part of a merger between DuPont and Dow Chemical Company.
"Defendants also maintain their so-called 'rebates' (in reality, exclusion payments meant to impede generic sales) at levels that ensure distributors will profit more from selling defendant's branded products than they would from selling generic products, even at high volumes," the lawsuits said.
"Additionally, defendants strictly enforce the terms of the loyalty programs and penalize distributors who do not meet loyalty thresholds. In some instances, the consequences of missing a loyalty threshold can be so severe that distributors have declined to purchase or promote generic products at all, have endeavored to exceed loyalty thresholds, and have deferred purchases of generic products until the end of the season, in order to minimize the risk of inadvertently missing a loyalty threshold."
The lawsuits said loyalty-program "complexity" and a "lack of transparency" to farmers and generic manufacturers "harmed by the conduct and deferred payment timing" cause distributors to retain loyalty program payments as profit and "make them less likely to pass on loyalty program payments to farmers in the form of lower prices."
In an Oct. 21, 2022, letter sent to Syngenta distributors and retailers, Syngenta Crop Protection, LLC, President Vern Hawkins said the company would continue to offer the loyalty program while the legal cases play out.
In the letter, Hawkins said the lawsuit by FTC and the 10 states including California, Colorado, Illinois, Iowa, Indiana, Minnesota, Nebraska, Oregon, Texas and Wisconsin, makes "false and misleading allegations" regarding Syngenta's discount program and that the company intends to defend the program.
"Please rest assured that our program will remain available for all customers who choose to participate while we defend this matter," Hawkins wrote.
Although the FTC lawsuit alleges the discount program "coerces" distributors and retailers to not buy generic products, Hawkins said it was not true and that distributors and retailers "always have the free choice not to participate in Syngenta discount programs and to purchase whatever generic companies' products or other innovator companies' products they want."
Hawkins said despite FTC claims, the U.S. crop protection industry is "very competitive and distributors, retailers and farmers have many crop protection product choices."
He went on to say, "We are disappointed that the FTC has chosen to disregard the pro-competitive effects these discount programs provide to you, including greater choice and lower prices."
Corteva offered the following statement to DTN in response to the FTC complaint in September: "Corteva Agriscience believes there is no basis for the complaint filed by the Federal Trade Commission on Sept. 29, 2022, and that the FTC's case faces significant hurdles on both the facts and the law. We will vigorously defend our position that Corteva's customer marketing programs are fully compliant with the antitrust laws and are, in fact, pro-competitive programs that benefit both channel partners and farmers.
"Corteva's marketing programs, contrary to the FTC's assertion that they block generics from entering the market, facilitate the company's pro-competitive mission of providing innovative products, services, support and stewardship to customers through Corteva's network of distributors and retailers. As always, our aim is to provide significant value and choices to customers, allowing them to be more sustainable, productive and profitable in their operations. Corteva also equips them to provide consumers with a wider range of healthy and nutritious food options, as well as to produce fuel, feed and fiber to support the needs of society.
"As a U.S.-based innovator of crop protection products, this case threatens the pro-competitive investments that Corteva makes and that growers rely on to protect America's crops. We are confident that we will prevail in this litigation and that there is no basis for the FTC's complaint."
Read more on DTN:
"Syngenta, Corteva Sued by FTC, States," https://www.dtnpf.com/…
Todd Neeley can be reached at [email protected]
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