German chemical giant Bayer has agreed to remove ‘unfair provisions’ in its seed contracts for seven years, Investigate Midwest reported.
The move was announced by the US Department of Justice (DoJ) on 20 May as part of the Antitrust Division’s ongoing investigation into exclusionary conduct in corn and soyabean seed markets.
According to the DoJ, independent seed companies license seed technology from Bayer and have had to meet sales targets for both corn and soyabean in order to achieve discounts under Bayer’s loyalty ‘Premier Performance Program’.
“This contractual restraint raised concerns that Bayer was anti-competitively tying corn seed and soyabean seed,” the DoJ said. Bayer had agreed to drop the tie between corn seed and soyabean seed for seven years, starting in the 2025 planting year.
The programme had also included incentives that could limit independent seed companies’ willingness to license technology from Bayer’s competitors, the department added. Bayer also agreed not to reinstate these incentives for seven years.
“American farmers deserve competitive markets, not contractual restrictions that limit choice and innovation,” said Associate Attorney General Stanley Woodward. “This Department of Justice will use every appropriate tool to protect farmers and preserve competition.”
The DoJ did not immediately respond when asked why the agreement would be for a seven-year period, Investigate Midwest wrote on 22 May.
Although Bayer did not respond when asked by Investigate Midwest if it planned to reinstate the provisions after the agreement ended, the company said that it accepted the agreement as it believed “these changes made sense” for Bayer and its resellers.
With few specifics of the agreement made public, it was difficult to judge how effective the deal would be at lowering prices for farmers, according to Bill Freese, the science director at the Center for Food Safety, which had studied the effect of seed industry concentration on farmers.
“While vigorous antitrust actions are needed in the seed-pesticide sphere, these modest agreements with Bayer do not go nearly far enough to help American farmers,” he said.
Loyalty programmes had been part of the seed and chemical industry, with seeds and pesticides typically sold together for decades, Investigate Midwest wrote.
The seed and chemical industry is highly concentrated and according to US Department of Agriculture (USDA) research from 2023, two companies – Bayer and Corteva – sell more than half of all corn and soyabean seeds in the USA and also own the majority of patents related to the two commodities.
