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Monsanto's Monopoly of Biotech Sector Spurs Lawsuit

Monsanto Market Power Scrutinized in Lawsuit
Aug 25, 2004

By Carey Gillam

KANSAS CITY, Mo. (Reuters) - Monsanto Co.'s domination of the biotech crop market is indisputable.

The company controls 100 percent of the market for certain specialized soybean and corn seeds that help farmers fight weeds, along with more than 80 percent of the market for a corn that resists destructive insects. In all, Monsanto corn and beans strains are planted annually on more than 70 million acres of U.S. farmland.

No other competing agroscience company even comes close to matching market share with Monsanto. It's an accepted reality in farm country, where Monsanto's dominance has allowed it to command steep prices.

But is it illegal?

That is the question raised in a lawsuit filed last month by Basel, Switzerland-based Syngenta, the world's biggest agrichemicals company and bitter Monsanto rival.

The lawsuit alleges that since the 1990s, Monsanto has "maintained and increased its monopoly power in multiple markets through a series of coercive tactics and exclusive dealing arrangements designed to keep out all competition."

The petition, filed in U.S. District Court in Delaware, says Monsanto has set up unfair "bundling" deals that induce seed companies to make sure sales across all product lines are at least 70 percent Monsanto brands.

It alleges Monsanto has built up control over a majority of the foundation corn seed market in the United States and then structured deals with seed companies that sharply limit the ability of competitors to access enough foundation seed to bring new biotech traits to market.

"There are all these hurdles in front of us that we have to jump over in order to compete," said Syngenta in-house counsel Ed Resler. "How does a company like Syngenta compete with a monopolist like Monsanto?"

Monsanto has not yet filed a response to the petition. Spokeswoman Lori Fisher said Syngenta's claims are without merit, and Monsanto "will vigorously defend against these allegations."

Experts in anti-trust say the boundaries for what is considered unlawful monopolistic behavior have yet to be clearly established, especially in cases involving intellectual property rights, and the Monsanto case has the potential to break new ground.

"It may well be the case that defines the relationship between antitrust law's commitment to open markets and intellectual property law's commitment to exclusive rights," said Peter Carstensen, a University of Wisconsin law professor who has testified before Congress on agriculture and anti-trust concerns.

Carstensen and other legal experts said the allegations of bundling are particularly troubling.

"The rule is that tying a product is which you don't have market power to a product in which you do have market power is unlawful under some circumstance," said Michael Stumo, general counsel for the Organization for Competitive Markets.

© Copyright Reuters 2004