U.S. turns up heat on Monsanto
Antitrust enforcers have intensified their probe of Monsanto Co.’s dominance in genetically modified seeds, ordering the company to turn over information related to its Roundup Ready genetic trait in soybeans.
Monsanto disclosed Thursday that the Department of Justice issued a civil investigative demand, a formal request for information, which follows an informal probe begun by government lawyers last year. Company spokeswoman Kelli Powers declined to specify what information is being sought.
Creve Coeur-based Monsanto, the world’s largest seed company, said it has provided access to millions of pages of documents and will continue to cooperate with the government.
"We believe our business practices are fair, pro-competitive and in compliance with the law," Monsanto Chief Deputy Counsel Scott Partridge said in a statement.
The Justice Department’s probe of Monsanto coincides with claims by the company’s chief rival, Pioneer Hi-Bred International Inc., and other critics who say Monsanto’s leading position in the multibillion-dollar biotech seed market and business practices are stifling innovation that could benefit farmers.
The Justice Department has shown an increasing interest in the genetically modified seed business, leading to this week’s demand to Monsanto for additional information.
Thomas L. Greaney, a law professor at St. Louis University, said civil investigative demands like those received by Monsanto represent the second step in an antitrust investigation and are used by government lawyers to obtain specific documents, depositions and internal memoranda that the company wouldn’t voluntarily hand over and that could be useful in preparing an antitrust case.
"They don’t do it lightly," said Greaney, who spent 10 years at the Justice Department, including a stint as assistant chief in charge of antitrust matters in health care.
It does not suggest, however, that such a lawsuit is imminent, he said.
Thursday marked the first time the Justice Department has confirmed an investigation of possible anti-competitive practices in the seed industry. Department spokeswoman Gina Talamona declined to be more specific about the scope of the investigation or to name the companies involved.
However, Pioneer’s parent, DuPont, acknowledged that it received a civil investigative demand from the Justice Department, spokesman Dan Turner said.
And two other big seed companies, Dow AgroSciences and Syngenta, have also spoken with the department regarding the probe, spokesmen said.
Peter Carstensen, a University of Wisconsin law professor who previously worked as a staff attorney at the Justice Department’s Antitrust Division, said the government’s demand for information is a sign that it has "ratcheted up its investigation" of Monsanto.
Carstensen is an expert witness for a farmer being sued by Monsanto and believes there’s a valid antitrust argument to be made against the seed giant need a personal loan with bad credit.
Still, the intersection of intellectual property rights and antitrust law makes any case a complex one that could be difficult for the government to prove in court.
"There are going to be some very hard legal questions with respect to how much right does Monsanto have to use its patent rights in a way that is exempt from antitrust review," he said.
Allegations by Monsanto’s critics focus mainly on the company’s biotech soybeans, which are genetically modified to resist Roundup and other glyphosate-based weed killers. The technology allows farmers to spray entire fields with herbicide without killing crops.
Today, the Roundup Ready genetic trait is found in more than 90 percent of the U.S. soybean crop, including seeds sold by DuPont’s Pioneer unit and other competitors. Monsanto collects a technology fee for licensing the trait.
DuPont has complained to the government that its agricultural subsidiary Pioneer is not being allowed to develop seeds that combine Monsanto’s patented Roundup Ready genetic trait with a separate Pioneer-developed trait for herbicide resistance.
"The ag biotech trait market is firmly in the grip of a single supplier, acting as a bottleneck to competition and choice," DuPont said in formal comments submitted Friday to the Justice Department.
The companies have waged a legal battle since last spring when Monsanto sued DuPont for patent infringement related to their licensing agreement. DuPont countersued weeks later, claiming that Monsanto is using anti-competitive tactics to preserve its market share. The case is pending in U.S. District Court in St. Louis.
Monsanto is currently trying to persuade seed companies to switch to its new, higher priced biotech soybean called Roundup Ready 2 Yield.
DuPont has alleged that Monsanto is trying to force independent seed companies and farmers to make the switch to eliminate the potential for competition from a generic alternative.
To diffuse criticism, Monsanto sent farm groups and seed companies a letter on Dec. 15 stating that farmers would be allowed to continue growing first-generation Roundup Ready soybeans after the herbicide resistance trait patent expires in 2014.
Monsanto said the Justice Department’s demand for information seeks confirmation that it will follow through on that promise.
The Monsanto investigation is part of a broad look at the state of competition in agriculture by President Barack Obama’s administration.
The Justice Department and Department of Agriculture last year announced a nationwide series of workshops in 2010 to hear farmers concerns.
The first session will be held in Iowa on March 12 and focus on issues related to row crops, including biotech seed.