FTC and State Attorneys General Sue Syngenta and Corteva for Agreements with Distributors That Allegedly Cost Farmers Millions in Overcharges

by | Oct 4, 2022 | Blog | 0 comments

On September 29, 2022, the Federal Trade Commission (“FTC”) and several state attorneys general filed a complaint (“FTC Complaint”) against Syngenta and Corteva alleging anticompetitive conduct with respect to certain active ingredients used in crop protection products, also known as pesticides.[1]  The FTC Complaint follows what is likely at least a year-long, if not longer, investigation into Syngenta and Corteva’s conduct in the agricultural sector.

Syngenta and Corteva develop and manufacture, among other things, chemical substances that target and kill pests such as weeds and insects. They then sell these products, either in their original form as active ingredients or as part of chemical mixtures, through various distributors and retailers to farmers.

According to the FTC Complaint, Syngenta and Corteva each designed and implemented “loyalty programs” with their distributors. Under these loyalty programs, Syngenta and Corteva  provide payments to distributors who sell a sufficient quantity of Syngenta and Corteva products. But distributors only receive these so-called “rebates” if they agree to restrict their use of,  dealings with, and sales of competing, lower-priced, generic products.

According to the complaint, distributors profit more from Syngenta and Corteva payments than they would from selling large amounts of generic products. And, the loyalty thresholds under Syngenta and Corteva’s programs are so high that distributors sometimes will not risk selling generic products at all in case they cannot meet their loyalty thresholds and thereby forfeit their “rebates.”

Moreover, generic manufacturers cannot efficiently market or distribute their products without the loyalty program distributors. There are only seven distributors in the market, says the FTC Complaint, and their services are essential to any manufacturer selling crop protection products. Therefore, if distributors refuse to sell generic products, generic manufacturers are hard-pressed to bring their products to market.

All of this results in harm to a major group of consumers—America’s farmers. Due to Syngenta’s and Corteva’s loyalty programs, American farmers have limited, and sometimes no, access to lower-priced, generic pesticides. They must buy the higher priced products. The FTC Complaint alleges farmers have paid millions in overcharges for these products.

Notably, these products are critical to yielding the right quantity and quality of crops. The specific active ingredients covered by Syngenta’s and Corteva’s loyalty programs are  azoxystrobin, mesotrione, metolachlor, rimsulfuron, oxamyl, and acetochlor. Each active ingredient is differentiated from the others, targeting different pests, suitable for use on different crops, and performing differently in various weather and climates. Collectively they kill pests for a wide variety of crops including corn, soybeans, grain, sorghum, cotton, sunflowers, vegetables, fruits, tree nus, peanuts, and tomatoes—to name some of them.

According to the FTC Complaint, if not for Syngenta and Corteva’s conduct, farmers would have saved millions of dollars each year for these essential pesticides.  The FTC and attorneys general seek injunctive relief and civil penalties.

If you have any questions or would like to discuss this matter further please contact Noelle Feigenbaum at nfeigenbaum@lowey.com or by phone at 914-733-7240. You can also use the form below.

[1] Complaint, FTC et al. v. Syngenta Crop Protection AG et al., No. 1:22-cv-00828 (M.D. N.C. Sept. 29, 2022), ECF No. 1, available at https://www.ftc.gov/system/files/ftc_gov/pdf/SygentaComplaint.pdf.