Attorney General Eric Holder and the Justice Department antitrust chief Christine Varney joined farmers, state officials, economists, and industry representatives in Ankeny, Iowa, on Friday for the first of a series of hearings on competition in the agriculture industry.
In his opening remarks, Holder said: “We know that a growing number of American farmers find it increasingly difficult to survive by doing what they’ve done for decades. And we’ve learned that some of them believe the competitive environment may be, at least in part, to blame.”
The discussions, hosted by the Justice and Agriculture departments, are a “milestone event,” Holder said, because “not once” since federal antitrust laws were passed “have our nation’s departments of Justice and Agriculture come together for a public discussion on competition and regulatory issues” in the industry.
The backdrop of the debate is an antitrust battle between two huge seed companies, the St. Louis-based Monsanto Co. and Pioneer Hi-Bred International Inc., a Johnston, Iowa, based subsidiary of DuPont.
Monsanto patented a now-ubiquitous technology that makes seeds resistant to weed killers. DuPont has accused Monsanto of using restrictive licenses on that technology that shut out competitors and force farmers to pay higher prices for seeds.
The Justice Department is conducting a probe into competition in the seed industry, and DuPont has urged the agency to act against Monsanto.
The battle spilled over into Friday morning’s newspapers, with the Los Angeles Times and the New York Times focused on rising seed prices, while Business Week focused on Monsanto’s rights as the patent holder.
In a statement about the workshop, Monsanto’s vice president of industry affairs, Jim Tobin, said: “The fight to win the farmer’s business is intense and that has translated to not only more profitable choices for farmers over the past decade, but also more value for farmers.”
Tobin, who is appearing at the Iowa workshop, cited a study that found U.S. farmers have seen $20 billion in extra income in the past decade from growing corn, soybeans and cotton with engineered seed.
Monsanto said it invested in biotech research when that kind of technology was considered financially risky.
In a January ruling, a federal judge in Missouri said that DuPont had violated the terms of its contract with Monsanto when it combined its own herbicide-resistant gene with Monsanto’s popular Roundup Ready trait. But the judge did not say whether the license agreement was anticompetitive, which DuPont has alleged.
“Because Roundup Ready is in all seeds,” Denvir said in an interview, “the effect is to exclude competitors.”
Denvir likened Monsanto’s tactics to Microsoft’s practice of tying its web browser, Internet Explorer, to its popular operation system, Windows. That practice led to the government’s landmark antitrust case against Microsoft, which alleged that the software giant shut competing browser companies like Netscape and Opera out of the market.
No trip to Iowa would be complete without touching on the state’s role as the first primary in the presidential election season. In his speech, Holder said of his time in Iowa during Obama’s campaign: “That’s when the people of this great state taught me – and proved to our entire nation – that no matter how improbable the goal or difficult the task, there’s simply no better place to begin than here in Iowa.”
Main Justice contributor Geoffrey Manne is blogging from the workshop here.
updated at 3:45 p.m. to add comments from DuPont.
Monsanto won a small victory on Friday, when a federal judge ruled that rival Dupont had violated the terms of a contract in combining Monsanto technology with its own in producing genetically modified seeds.
But the ruling was only a partial victory for Monstanto because it left open the possibility that the St. Louis-based Monsanto may still be on the hook for antitrust violations.
“The Court does not express any opinion on the viability … that the license agreements … are unenforceable as a matter of patent law and on antitrust grounds,” wrote Judge E. Richard Webber of the Eastern District of Missouri, in his ruling. ”[Dupont] may be able to demonstrate that Monsanto may not recover for patent infringement or breach of contract.”
It is the latest development in a long-running war between the nation’s two largest seed manufacturers, who have sued each other in a patent and contract dispute. Dupont has also urged the Justice Department’s Antitrust Division to investigate Monsanto’s licensing practices which, Dupont alleges, shut out competitors and force farmers to pay higher prices for seeds.
At issue is Monsanto’s Roundup Ready gene, a technology used in corn and soybean seeds that can resist weed killers and is used by the vast majority of farmers.
Monsanto licensed the seed technology to Dupont subsidiary Pioneer Hi-Bred International Inc. in 2002 in exchange for royalties. Four years later, Dupont introduced its own herbicide-resistant gene and combined it with the Roundup traits it had licensed. Monsanto sued and said the contract did not allow Dupont to combine the two technologies.
Dupont then accused Monsanto of abusing its patent monopoly and using anti-competitive licensing tactics.
The Justice Department requested information from seed manufacturer Monsanto Company about its soybean trait business, the company announced this morning.
Justice Department spokeswoman Gina Talamona confirmed that the agency is investigating the possibility of anticompetitive practices in the seed industry.
The agency issued a request, known as a civil investigative demand, seeking information about access that Monsanto will provide to certain soybean technology once the patent on that technology runs out, the company said.
“Monsanto continues to cooperate with the U.S. Department of Justice inquiries, just as we have over the last several months,” Scott Partridge, Monsanto’s Chief Deputy General Counsel, said in a statement. “We respect the thorough regulatory process. We believe our business practices are fair, pro-competitive and in compliance with the law.”
Also in the statement, the company said it has provided “extensive access to millions of pages of documents to ensure that regulators’ questions are addressed.”
The announcement comes amidst a DOJ review about competition issues in the agriculture industry. Monsanto rival E.I. du Pont de Nemours & Company filed a report with the Justice Department last week asking the agency to curtail what it deemed Monsanto’s “anticompetitive practices”.
Tensions between the two rivals have been simmering for years.
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Dupont attacked rival seed manufacturer Monsanto today, calling on the Justice Department to intervene and accusing the company of engaging in “anticompetitive practices” that limited innovation and raised prices in the market for genetically modified seeds.
In a report released today, the Dupont-owned Pioneer Hi-Bred International said Monsanto had 98% of the market for genetic traits created for soybeans, and 79% of that market in corn.
Dupont said Monsanto engaged in “anticompetitive practices designed to protect and extend that power.”
The report was filed with the Justice Department and the Department of Agriculture in the context of a series of workshops the agencies are holding this year on competition issues in agriculture.
The report details claims similar to those in a December report by the Associated Press about Monsanto’s tactics. Both accuse the seed giant of using restrictive licenses which shut out competitors and force farmers to pay higher prices for seeds.
“Monsanto’s license agreements prevent seed companies from combining different characteristics in a single seed,” the Dupont report said.
In its own filing last month, Monsanto said the seed market is a competitive one. “No single company has a dominant share of seed sales in corn, soybean or cotton,” the company said.
Monsanto also told farmers last month they could continue to use a popular soy bean product and would not have to switch to a new, more expensive, version when the patent expired.
In its report to the Justice Department, Dupont likened Monsanto’s behavior to the chip giant Intel Corp., which is under fire from multiple antitrust regulators, including the Federal Trade Commission, for allegedly using its monopoly power to keep rivals out of the market for computer chips.
“An important premise of the FTC case is that Intel has inordinate leverage because its processors are “must haves” for its customers,” the report says.
“And Monsanto, like Intel, is using its restrictive agreements and practices to foreclose new competitors from gaining access to customers.”
Dupont also suggested that Congress might explore legislation that would promote generic competitors to enter the seed trait market, similar to laws governing generic drug manufacturers.
Lester Shubin (Family photo via the Washington Post).
Lester Shubin, a former Justice Department researcher who first thought to use Kevlar in bullet-resistant vests, died after a heart attack at his Fairfax County home last week at the age of 84, reports the Washington Post.
Shubin was working for the National Institute for Justice, the research and development branch of the Justice Department, in the early 1970s when DuPont came out with what he called a “funny yellow fabric” intended to replace steel belting on high-speed tires.
“We folded it over a couple of times and shot at it. The bullets didn’t go through,” Shubin was quoted as saying in a Justice Department report on the National Institute for Justice’s accomplishments.
Shubin obtained $5 million in research money from the Justice Department as his fellow researcher began developing tests. Kevlar vests have been credited with saving the lives of more than 3,000 law enforcement officers since 1975.
In his capacity as a researcher, Shubin was one of the first to recommend that dogs be used to find bombs.
“We learned that basically any dog could find explosives or drugs, even very small dogs like Chihuahuas, whose size could be an advantage,” Shubin said. “Who is going to look twice at someone in a fur coat carrying a dog? But that dog could smell a bomb as well as a German shepherd.”
Shubin was born in Philadelphia on Sept. 27, 1925 and served in the Army in France and Germany. He was among the troops that liberated the Dachau concentration camp, his son, Harry Shubin, told the Washington Post.
Read more here: Lester D. Shubin, 84; developed Kevlar bulletproof vest – washingtonpost.com.
This Justice Department speech caught our eye for several reasons: Hometown (St. Louis), agriculture and antitrust. Three of our favorite things.
(Monsanto)
It’s been a while since we’ve considered agriculture in terms of antitrust enforcement, and we’re happy to do so now. On Friday, Philip J. Weiser, a telecommunications-law expert who was appointed deputy assistant attorney general in April, told a group of farmers (in Missouri!) that antitrust regulators are taking a hard look at the level of competition in several agribusiness sectors.
Click here for the WSJ story, and click here for Weiser’s full remarks, which include a well-presented history of the Sherman Act and its ties to ag biz, including the beef trust in Chicago.
As the WSJ notes, Washington has often sided with farmers who find themselves selling their commodities to fewer and larger processors. But the Obama administration is taking it a step further. Weiser said Antitrust has plans for workshops, in cooperation with the USDA, that will focus on a number of issues.
They include:
- Evaluating the state and nature of competition in a range of agricultural markets
- The impact of vertical integration
- Concerns about “buyer power”
- Relevant regulatory regimes
- The nature of transparency in the marketplace
Weiser, speaking in the hometown of St. Louis crop-biotechnology giant Monsanto Co., didn’t point any fingers during his speech at the annual convention of the Organization for Competitive Markets, a Nebraska-based non-profit that bills itself as “the only national think tank focusing strictly on antitrust and trade policy in agriculture.” Its Web site says it is funded by crop and livestock producers. OCM has complained about Monsanto’s dominance over genetically modified seeds.
Scott Kilman and Evan Perez report:
The vast majority of the genetically modified crops grown in the U.S. farm belt contains at least one gene from Monsanto. Its success has made the company a formidable rival of DuPont Co.’s Pioneer Hi-Bred seed unit, which has accused Monsanto of being a monopolist.
DuPont spokesman Dan Turner told the WSJ that the company has backed the OCM for years, but that it didn’t sponsor Friday’s meeting. A Monsanto spokesman told the newspaper that DuPont’s support for OCM was “extremely disappointing, because they are aligning themselves with an organization that is spreading false and misleading information about our business.”
This post contains information added after its original publication date of Aug. 8.
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