US: Monsanto's dominance draws antitrust inquiry

Publisher Name: 
Washington Post

For plants designed in a lab a little more than a decade ago, they've
come a long way: Today, the vast majority of the nation's two primary
crops grow from seeds genetically altered according to Monsanto company patents.

Ninety-three percent of soybeans. Eighty percent of corn.

The seeds represent "probably the most revolutionary event in grain
crops over the last 30 years," said Geno Lowe, a Salisbury, Md.,
soybean farmer.

But for farmers such as Lowe, prices of the Monsanto-patented seeds
have steadily increased, roughly doubling during the past decade, to
about $50 for a 50-pound bag of soybean seed, according to seed
dealers.

The revolution, and Monsanto's dominant role in the nation's
agriculture, has not unfolded without complaint. Farmers have decried
the price increases, and competitors say the company has ruthlessly
stifled competition.

Now Monsanto -- like IBM
and Google -- has drawn scrutiny from U.S. antitrust investigators, who
under the Obama administration have looked more skeptically at the
actions of dominant firms.

During the Bush administration, the Justice Department did not file
a single case under antimonopoly laws regulating a dominant firm. But
that stretch seems unlikely to continue.

This year, the Obama Justice Department tossed out the antitrust
guidelines of its predecessor because they advocated "extreme hesitancy
in the face of potential abuses by monopoly firms."

"We must change course," Christine Varney, the Obama administration's chief antitrust enforcer, said at the time.

Of all the new scrutiny by Justice, the Monsanto investigation might
have the highest stakes, dealing as it does with the food supply and
one of the nation's largest agricultural firms. It could also force the
Obama administration, already under fire for the government's expanded
role in the economy, to explain how it distinguishes between normal
rough-and-tumble competition and abusive monopolistic business
practices.

Monsanto says it has done nothing wrong.

"Farmers choose these products because of the value they deliver on
farm," Monsanto said in a statement. "Given the phenomenally broad
adoption of these technologies by farmers, such questions are normal
and to be expected."

Even with the growing cost, farmers have embraced the genetic
modifications because they save work and enable them to cultivate more
land. The modified plants can stand up to the powerful herbicide
glyphosate, best known commercially as Roundup, allowing them to use
the weedkiller not just before planting but also after the crops have
come up.

"Everybody wants it, and Monsanto is seeing what the market will
bear," said Lowe, 39. "People say that's capitalism. The question is,
where does capitalism meet corruption?"

Before it jumped into biotechnology, Monsanto was already one of the
nation's largest chemical companies and had patented glyphosate,
bringing it to market as Roundup in the '70s.

The product kills just about all weeds, and for farmers it served as
a wonderfully effective herbicide. Instead of tilling the earth, they
could simply blanket it with Roundup. Because the chemicals in Roundup
break down quickly in the sun and rain, seeds could be planted shortly
afterward.

It became one of the best-selling herbicides ever, and the seed
patents at the center of the antitrust allegations were built upon that
chemical's appeal.

If there was a practical drawback with Roundup, it was that it
couldn't be used after planting: Applying Roundup at that point would
kill the crops, too.

Scientists wondered: Could they develop plants that could withstand Roundup?

The answer emerged, partly by accident, out of Louisiana muck.

Monsanto was producing Roundup at a plant in Luling, La., and the
water and sludge in the waste ponds around the plant were exposed to
the chemical. It was the perfect place to find organisms that could
withstand the chemical's lethal effects.

After bacteria discovered in the pond sludge proved resistant to the
chemical, scientists isolated the gene that gave the bacteria Roundup
tolerance and placed that gene, known as CPS4, into soybeans, then
corn.

The resulting plants, called "Roundup Ready," represented a
billion-dollar breakthrough and, as Monsanto sees it, a just reward for
its $1.5 billion investment in biotech research.

"During the same period, our competitors . . . largely ignored
biotech," the company said in a statement. "Monsanto took risks our
competition chose not to take."

Although farmers have grumbled about Monsanto's regular price
increases for Roundup Ready technology for seeds, it is DuPont, a
Monsanto rival, that has pressed the antitrust case.

Farmers and seed companies "are afraid to speak in public, worried
that they will become victims of retaliation," Thomas L. Sager, DuPont
senior vice president and general counsel, said in a statement. "That's
why it's so important that antitrust investigators move quickly -- to
learn the truth before even more harm is done to America's farmers."

In court papers, DuPont argues that Monsanto has used the dominance
of the Roundup Ready brand to prevent competitors from bringing
innovations to market.

In its view, Roundup Ready is so popular that any new biotech
innovations must be designed to work with Monsanto's technology. But
Monsanto effectively freezes out the competition, it says, by making it
difficult for other companies to win a license to add their traits to
Monsanto-patented seeds.

"Monsanto has abused its unlawfully-acquired monopoly power to block
competition, thwart innovation and extract from farmers unjustified
price increases of over 100 percent in recent years," DuPont argues in
court documents.

A recent paper by Diana Moss of the American Antitrust Institute
broadened the antitrust case against Monsanto and called for legal
enforcement, citing "an almost intractable situation for competition."
The institute has taken donations from DuPont but does not cater to its
donors' viewpoints, officials said.

Monsanto says that the allegations of stifling competition are "without merit" and that it broadly licenses its technology.

"We license Roundup Ready technology to hundreds of independent seed
companies and our major competitors," Lee Quarles, a company spokesman
said. The company won't license Roundup Ready without restriction,
however, because it wants to ensure that any other traits that are
stacked onto the Roundup Ready seeds actually function as promised, a
precaution that protects their brand and their customers, Monsanto
officials say.

Out in the fields, meanwhile, there remains resentment and wonder about the Monsanto-patented seed.

According to Moss, the price of seed from 2000 to 2008 outpaced the growth of crop yields by 2 to 4 percent a year.

Several farmers said the cost of Roundup Ready seeds seemed to rise
faster than their own margins. But that doesn't mean, at least just
yet, that they'll stop using them.

"Everybody likes Roundup Ready," said William Layton, a grain farmer
on the Eastern Shore. "Maybe it costs a little more than we like. But
everybody's going to keep using it."

AMP Section Name:Food and Agriculture
  • 183 Environment
  • 190 Natural Resources
  • 195 Chemicals
  • 208 Regulation