Washington, FTC settlement lowers pesticide prices for farmers
The Federal Trade Commission and a coalition of states – including Washington – have secured a proposed settlement with pesticide manufacturing giant Corteva Inc. that will lead to lower pesticide prices for farmers.
The proposed settlement, filed in court late Friday, curbs Corteva’s anticompetitive schemes that have blocked competitors from selling cheaper generic products to farmers.
Under the terms of the settlement, Corteva will dismantle its existing pesticides loyalty program, which has limited distributors’ ability to do business with generic competitors that seek to enter the market after Corteva patents have expired. For a period of 10 years, the proposed order will prohibit Corteva from conditioning payments or other benefits to a distributor on purchasing a high share of a given pesticide active ingredients from Corteva or similarly limiting its purchases of generics.
“This will promote a level playing field in the market where Washington farmers have more choices and ultimately lower costs,” Attorney General Nick Brown said. “And it means Washingtonians won’t have to pay more for the sake of corporate greed.”
The settlement resolves a lawsuit by the FTC and states in 2022, alleging Corteva implemented a post-patent loyalty program that paid distributors to block competitors from selling its cheaper generic products to farmers. It was alleged this conduct allowed Corteva to maintain elevated prices, forcing American farmers to spend millions of dollars more for essential crop protection products.
The complaint makes similar allegations as to Syngenta – another pesticide manufacturing giant – and its post-patent loyalty program. Those allegations remain in litigation.
Ordinarily, lower-priced generic competitors should be able to enter the market and drive down prices once the relevant patent and regulatory exclusivity periods have expired. The complaint alleged the challenged loyalty programs illegally extend Syngenta’s and Corteva’s monopolies by excluding lower-priced generic competitors from an essential distribution channel. The result was U.S. farmers were forced to overpay for crop protection products.
The proposed settlement agreement places a 10-year prohibition on Corteva from
- Implementing loyalty programs that condition payments to a Corteva distributor customer on the customer purchasing a greater-than-50% share of its requirements of a given pesticide active ingredient from Corteva,
- Implementing share-based programs that limit the share of a generic product that a distributor customer may purchase to under 50% (or the volume equivalent),
- Implementing a volume-based loyalty program for the purpose of replicating or reintroducing a prohibited share-based loyalty program,
- Implementing other, specified conditions that enhanced the exclusionary effect of Corteva’s prohibited loyalty program on generic competitors, and
- Discriminating against or threatening customers because they refuse to agree to prohibited exclusive or loyalty terms, or because they conduct business with Corteva’s competitors, including generic manufacturers.
The proposed order applies to all Corteva’s post-patent active ingredients, extending beyond the three named in the FTC and states’ complaint. In addition, the stipulated order requires Corteva to pay the state plaintiffs $35 million to resolve their monetary claims.
Other parties to the settlement include the states of California, Colorado, Illinois, Indiana, Iowa, Minnesota, Nebraska, Oregon, Tennessee, Texas, and Wisconsin.
Assistant Attorney General Lumi Nodit, Paralegal Michelle Oliver and Legal Assistant Debbie Chase worked on the case for Washington.
A copy of the proposed settlement can be found here.
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