CADE investigates Bayer for alleged involvement in anti-competitive practices
The General Superintendence of the Administrative Council for Economic Defense launched an investigation this past Thursday (12 Mar) into the companies Bayer Aktiengesellschaft, Monsanto Company and Monsanto do Brasil, all owned by the Bayer Group. The companies are under investigation for alleged anti-competitive practices in the seed and biotechnology markets.
The case started because of complaints made during the analysis of the acquisition of Monsanto Company by Bayer Aktiengesellschaft. CADE approved the transaction with restrictions in February 2018.
The General Superintendence launched an administrative case to review three practices that might have anti-competitive effects. The first is the establishment of certain rules in the Monsoy Multiplica Program (PMM), by Monsoy, a company owned by Grupo Monsanto, which works with genetic improvement of soybean seeds. Then there is the concession by Mosanto of commercial incentives to breeders for the adoption of Intacta technology (RR2 IPRO), also known as breeding incentives. The third and last is the obligation imposed by Monsanto that seed multipliers acquire at least 15% parent seeds in relation to their production area - an obligation also imposed by Bayer, even without a fixed percentage.
Regarding the first practice, the Superintendence found out that PMM is a program through which Monsoy (a breeding company that develops new varieties of soybean seed) grants discounts on royalties owed by soybean seed multipliers (companies that reproduce the varieties of soybean seed developed by breeders) to the company.
According to the Superintendence, the way the discounts are calculated in PMM generates incentives for participating multipliers to increase the proportion of Monsoy seeds or seeds with Intacta biotechnology (property of Monsanto) they use, inducing loyalty. Now, the Superintendence will assess whether the program can have the effect of closing the market for other breeders that compete with Monsoy or of hampering the growth of other breeders in the soybean seed market.
The second practice investigated is the concession of commercial incentives by Monsanto for breeders to develop soybean crops with Intacta biotechnology. The Superintendence assessed that, in this specific case, the incentives granted might have a loyalty effect; inducing breeders to concentrate their researches on Intacta technology crops and reduce the development of regular crops and RR. In this case, the Superintendence will assess if the concession of such incentives can potentially reduce the availability of crops without Intacta technology to farmers.
The third practice is the contractual provision established by Monsanto that requires soybean seed multipliers to acquire Monsoy parent seeds in the proportion of at least 15% of their production areas, in the first crop after the signature of the contract. Although the Superintendence found out that Monsanto has not been demanding compliance with this provision, the investigation pointed out the company would have economic benefits should it choose to do so, while multipliers would see their costs increase. For the Superintendence, such practice can have the effect of increasing the loyalty of multipliers in subsequent crops and of limiting the freedom of choice of multipliers
Now that there is an administrative case regarding the matter, the companies shall be notified to present their defense. At the end of the hearing phase, the Superintendence will issue an opinion suggesting the filing of the case or the imposition of sanctions for crimes against the economic order.
Access the Administrative Case 08700.000270/2018-71.