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Input Suppliers Face Lawsuit  01/14 14:07

   Lawsuit Alleges 14 Companies Violated Antitrust Laws by Boycotting FBN, 
Other Online Platforms

   A lawsuit brought by a farmer's widow alleges 14 major ag companies 
coordinated a boycott of online sales platforms such as Farmers Business 
Network and AgVend, a move it argues resulted in artificially high prices and 
amounts to a violation of antitrust laws. The companies say the suit is without 
merit.

Katie Micik Dehlinger
Farm Business Editor

   MT. JULIET, Tenn. (DTN) -- A new lawsuit alleges crop input manufacturers, 
wholesalers and retailers coordinated a boycott of online sales platforms such 
as Farmers Business Network and AgVend to prevent greater price transparency, a 
move the lawsuit argues amounts to collusion to keep prices artificially high 
in violation of antitrust laws.

   The lawsuit, which seeks class-action status, was filed in the U.S. District 
Court for southern Illinois by Barbara Piper on behalf of her late husband's 
estate. Michael Piper, who farmed near Mt. Vernon, Illinois, died in 2017. The 
lawsuit argues that Piper paid more for Liberty herbicide than what would have 
been a sustainable price in a genuinely competitive market, just like many 
other farmers across the country.  

   Fourteen defendants are named in the legal filing, and among them, crop 
input manufacturers such as Bayer Crop Science, Corteva, Syngenta and BASF. The 
lawsuit alleges large wholesalers, particularly Cargill, Winfield Solutions and 
Univar Solutions, were complicit in anti-competitive practices along with 
retailers, including CHS, Nutrien Ag Solutions, Growmark, Simplot, Tenkoz and 
Federated Co-operatives. 

   DTN contacted all defendants by email, and the responses received by the 
time this article was posted are included below. In general, the companies say 
they believe the lawsuit is without merit and they intend to put forth a 
vigorous defense. 

   The lawsuit argues the existing crop input distribution process, which uses 
a network of authorized retailers to reach customers, is designed to conceal 
pricing information, allowing companies to sell seed, chemicals and other 
inputs at higher profit margins while depriving farmers of information that 
would allow them to make better decisions.

   "Farmers, through no fault of their own, are unwittingly paying more for 
crop inputs than they would in a truly competitive market," the lawsuit states, 
arguing that input costs have risen substantially more than yields over the 
past 20 years. It argues that disparity is pushing farmers out of business. The 
lawsuit never mentions commodity markets or other factors that influence farm 
profitability. 

   The lawsuit details several companies' reaction to Farmers Business 
Network's (FBN) entry into the market, and the general concern that was widely 
discussed at CropLife America's annual meeting in 2017. CropLife America is a 
trade association that represents major crop input manufacturers, wholesalers 
and retailers, but because there are no farmers on the board of directors, the 
lawsuit alleges, the organization's meetings make "an ideal vehicle for 
collusion."

   A representative from Crop Life America told DTN it doesn't comment on 
ongoing litigation brought against its member companies.

   The lawsuit alleges that retailer and wholesaler defendants pressured the 
manufacturers to refuse to supply FBN because electronic platforms would cut 
into their market positions and profit margins and that manufacturers complied 
by imposing strict conditions in its contracts with authorized retailers to 
prevent sales to the startup.

   FBN attempted to break the boycott by purchasing Yorkton Distributors, a 
Canada-based retailer with decades-old supply agreements, but most of the 
manufacturing defendants canceled their contracts with Yorkton within a few 
months of the transaction. Instead, FBN began developing its own inputs.

   AgVend, another online platform, shut down its efforts at online sales after 
manufacturers' refusal to supply it.      

   "As a result of the Retailer, Wholesaler, and Manufacturer Defendants' 
coordinated actions, farmers were deprived of the opportunity to purchase crop 
inputs at transparent, lower prices from electronic platforms. Instead, they 
were forced to continue paying artificially high prices for crop inputs 
purchased from local retailers subject to Defendants' confidentiality 
requirements," the lawsuit stated.

   Canada's Competition Bureau is formally investigating collusion, and the 
lawsuit said the U.S. Department of Justice is also considering opening a case.

   DTN attempted to contact all the defendants by email. Not all responded by 
the time this article was posted.

   A representative from Corteva said they're aware of the lawsuit "involving 
allegations relating to the manner in which several agricultural industry 
members marketed and sold products. Corteva believes that the allegations are 
factually and legally unsupported and will vigorously defend the case."

   A spokesperson for Syngenta said the company "is dedicated to the support 
and success of our customers, and we will vigorously defend any allegations 
that our actions have been improper or illegal."

   Bayer said it has not yet been served with the complaint, "and will review 
it in due course. Based on information in published reports, we believe the 
markets identified in this action are competitive, and the complaint has no 
merit."

   BASF also said it is aware of the lawsuit "alleging BASF and certain other 
manufacturers, distributors, and retailers of crop inputs violated antitrust 
laws. BASF strongly disagrees with the allegations in the lawsuit and intends 
to defend itself vigorously. Most importantly, BASF is committed to a fair and 
competitive marketplace that provides access for farmers to the critical 
products they need."

   A CHS representative said they're aware of the filing, but it is company 
policy not to comment on pending litigation.

   Katie Dehlinger can be reached at katie.dehlinger@dtn.com 

   Or you can follow her on Twitter at @KatieD_DTN




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