Iowa has joined nine other states and the Federal Trade Commission in filing a lawsuit against pesticide makers Syngenta and Corteva Agriscience, alleging anti-competitive practices that have cost farmers millions of dollars.
The complaint, filed in a U.S. District Court in North Carolina, accuses the companies of using “loyalty programs” with pesticide distributors to exclude generic competitors from the market.
"Farmers are paying unnecessarily high prices for pesticides, on top of soaring costs for other inputs,” said Iowa Attorney General Tom Miller, whose office worked with the Illinois attorney general’s office to lead the states’ investigation. “The defendants’ practices are unfair to smaller competitors and ultimately harm consumers.”
The companies in statements Friday denied wrongdoing.
The loyalty programs, according to the lawsuit, reward distributors for selling Syngenta and Corteva products while excluding or minimizing their sales of generic products, even though the two companies' patents and other protections have expired. As a result, the companies are able to "maintain high prices and dominant market positions years after exclusivity for an active ingredient has expired," the suit says.
The companies' "schemes have forced generic manufacturers to exit markets encumbered by loyalty programs or to decide not to enter due to those programs," the complaint said. “These unlawful business practices have cost farmers many millions of dollars a year."
The lawsuit, which accuses Syngenta and Corteva of violating state and federal laws, asks the court to end the loyalty programs and grant restitution to farmers in Iowa and other states.
Denying the allegations, Indianapolis-based Corteva, the parent of ag giant Pioneer Seeds in Johnston, said its marketing programs are "fully compliant" with antitrust laws and are, "in fact, pro-competitive programs that benefit both channel partners and farmers."
"There is no basis for the complaint," the company said in its statement, adding that the suit faces "significant hurdles on both the facts and the law,"
Switzerland-based, Chinese-owned Syngenta said the complaint is "contrary to the facts and the law and is without merit."
"This program is only one of several incentive programs offered by Syngenta in the U.S., and 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," the company said in a statement.
Syngenta and Corteva are among the largest makers of crop-protection products in the United States. The companies' products are used on a wide range of crops, including corn and soybeans.
To encourage innovation, companies such as Syngenta and Corteva can initially develop, patent and register active ingredients in their products and exploit their commercial potential exclusively for several years, the complaint says. But after those protections expire, generic manufacturers may enter the market, selling products with the same active ingredients and relying on the same toxicology and environmental impact studies.
This competition ordinarily leads to dramatic price reductions, benefiting farmers and consumers.
Corteva and Syngenta have entered into their loyalty program agreements with substantially all leading distributors in the United States, the suit alleges.
In addition to Iowa and Illinois, the attorneys general of California, Colorado, Indiana, Minnesota, Nebraska, Oregon, Texas and Wisconsin joined the suit.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at email@example.com or 515-284-8457.
This article originally appeared on Des Moines Register: Iowa joins states suing Corteva, Syngenta over loyalty programs