Texas Farmer Seeks Loyalty Program Damages

LINCOLN, Neb. (DTN) -- An antitrust lawsuit filed by a Texas farmer alleging Syngenta Crop Protection and Corteva Inc. paid distributors to block competitors from selling less-expensive generic products to farmers has been transferred to a federal court in North Carolina where the Federal Trade Commission and 10 state attorneys general filed a lawsuit.

Hankamer, Texas, farmer Justin W. Jenkins filed an anti-trust lawsuit against the companies in October 2022 in the U.S. District Court for the District of Southern Indiana in Indianapolis.

In that lawsuit, Jenkins alleged he and similarly situated farmers suffered losses because they were forced to "purchase CPPs (crop protection products) at prices that were inflated due to defendants' anticompetitive conduct."

Last week, the U.S. District Court for the Middle District of North Carolina approved the transfer of Jenkins' case.

Jenkins said in the lawsuit that the companies used loyalty programs to make "substantial payments to their wholesalers and in certain cases, also retailers," in exchange for the wholesalers and retailers agreeing to "strictly limit their purchases of -- and thereby prevent widespread distribution of -- generic versions of defendants' CPPs."

In his original complaint, Jenkins' attorneys told the court the farmer and others in similar situations are entitled to "recover damages reaching back even beyond four years" of the filing of the complaint.

"Plaintiff and members of the class had no knowledge of the defendants' unlawful, self-concealing scheme and could not have discovered the scheme and conspiracy through the exercise of reasonable diligence more than four years before the filing of this complaint." Jenkins' complaint said.

As was the case with the lawsuit filed by the FTC and the 10 attorneys general from California, Colorado, Illinois, Iowa, Indiana, Minnesota, Nebraska, Oregon, Texas and Wisconsin, Jenkins' action alleges the companies have violated the Sherman Act and its anti-monopoly provisions.

Syngenta and Corteva recently filed motions to dismiss the FTC and states' lawsuit. In filing the motions, the companies defended the legality of the loyalty programs.

The FTC and the states have alleged distributors only get paid if they limit business with competing manufacturers. Such arrangements, the complaint said, are "cutting off" competition and allowing the companies to "inflate their prices and force American farmers to spend millions of dollars more for their products."

In particular, the lawsuit alleged Syngenta has monopoly and market power on the fungicide azoxystrobin, and the herbicides mesotrione and metolachlor. The suit cites Corteva's herbicides rimsulfuron and acetochlor and the insecticide and nematicide oxamyl.

Syngenta and Corteva are two of the largest pesticide manufacturers operating in the United States. Syngenta, based in Switzerland, is a subsidiary of a Chinese state-owned company. Corteva, headquartered in Indianapolis, is the company formed as part of a merger between DuPont and Dow Chemical Company.

The FTC and states' complaint alleges Syngenta and Corteva take "illegal" steps to stop generic pesticides from eating into their profits. The loyalty programs include making payments to distributors -- as long as the distributors keep their purchases of competing generic pesticides beneath a certain threshold.

The FTC said the complaint was part of a "broader push to unlock competition and innovation in the American economy" as well as to "protect consumers and small businesses and crack down on unfair tactics by dominant companies."

The complaint also alleges the companies violated state-competition and consumer protection laws in California, Colorado, Illinois, Iowa, Indiana, Minnesota, Nebraska, Oregon, Texas and Wisconsin.

Read more on DTN:

"Chem Companies Defend Loyalty Programs," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

(c) Copyright 2023 DTN, LLC. All rights reserved.