U.S. Federal Trade Commission sues pesticide makers, alleging price scheme

Signage is seen at the Federal Trade Commission headquarters in Washington, D.C.
Signage is seen at the Federal Trade Commission headquarters in Washington, D.C., U.S., August 29, 2020. REUTERS/Andrew Kelly/File Photo

WASHINGTON, Sept 29 (Reuters) - The U.S. Federal Trade Commission on Thursday sued two top pesticide manufacturers for allegedly entering into exclusive contracts with distributors that kept prices paid by farmers artificially high.

The consumer watchdog agency was motivated to bring the case in part because rising costs and supply chain disruptions from Russia's invasion of Ukraine have put economic pressure on farmers, an agency official told Reuters.

Chinese-owned Syngenta and U.S.-based Corteva Inc. (CTVA.N) paid distributors not to offer farmers generic pesticides, herbicides and fungicides after the companies' patents on six chemical ingredients expired, the FTC said.

As a result, farmers have paid around 20% more, amounting to hundreds of millions of dollars a year, for the companies' products, the agency official said.

"By paying off distributors to block generic producers from the market, these giants have deprived farmers of cheaper and more innovative options," said FTC Chair Lina Khan in a press release.

Syngenta spokesman Saswato Das said the arrangements were customer discounts that were "part of a voluntary and industry-standard program that has been in place for decades" in the industry.

"Syngenta strongly disagrees with the FTC’s complaint, which it believes is contrary to the facts and the law and is without merit," Das said in an emailed statement. "We are disappointed that the FTC has failed to appreciate the beneficial effects that these rebate programs provide to our channel partners and to growers.”

Corteva spokesperson Kris Allen said in an email that the company believes the complaint has no basis.

"We will vigorously defend our position that Corteva’s customer marketing programs are fully compliant with the antitrust laws," Allen said.

The attorneys general of 10 states joined in the suit, the FTC said.

Prices for chemical weed and pest suppressants have risen sharply this year, sending farmers hunting for alternatives.

Earlier this year, the U.S. Department of Agriculture collected public comments on competition issues in the agricultural inputs sector, including pesticides, seeds and fertilizer.

Reporting by Leah Douglas; Additional reporting by William Mallard; Editing by Cynthia Osterman and Christian Schmollinger

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Thomson Reuters

Washington-based award-winning journalist covering agriculture and energy including competition, regulation, federal agencies, corporate consolidation, environment and climate, racial discrimination and labour, previously at the Food and Environment Reporting Network.