December 11, 2009

Focus On Monsanto Highlights Growing DOJ Scrutiny Of Dominant Firms

It is well known in the antitrust community that the Justice Department is searching for cases to bring against dominant firms that have violated the antitrust laws.  One such firm may be Monsanto.  In fact, the prices of patented seeds sold by agribusiness giant Monsanto, which make up a majority of the seed market for some staple crops, have roughly doubled in the past decade, leading to new scrutiny by the Justice Department’s Antitrust Division.  Given the importance of those crops to the food supply, government antitrust proceedings against Monsanto could potentially have a huge impact.  Most immediately, farmers, biotech firms, and agribusiness competitors of Monsanto such as the Dow Chemical Company, DuPont, BASF or Syngenta AG, may be impacted by any decision made by the Justice Department. 

The specific issue of concern is that Monsanto’s “Roundup Ready” soybean and corn seeds, which produce plants that can survive treatment with the company’s popular weed-killer Roundup, comprise 93% and 80% of their respective markets.  Prices for these seeds have reportedly increased faster than the crop yields that the seed technology enables.  Monsanto confirmed that the Antitrust Division has recently asked the company for information, mostly relating to an antitrust claim leveled at Monsanto by its competitor DuPont in a patent infringement suit.

This signal of an investigation comes as the DOJ has stepped up its scrutiny of dominant firm conduct.  Under the Bush administration, the agency filed no cases against alleged monopolists, instead focusing mostly on cartels.  The Obama administration’s Assistant Attorney General for Antitrust, Christine Varney, recently said that the agriculture industries were a priority for the division.  We will soon see whether that is the case.

Categories: Antitrust Enforcement, Antitrust Law and Monopolies

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