(The Center Square) – The State of Iowa is suing pesticide manufacturers Syngenta and Corteva.
Ten states and the Federal Trade Commission filed a complaint Thursday in the U.S. District Court in the Middle District of North Carolina.
They said Syngenta and Corteva have used “loyalty programs” with pesticide distributors to exclude generic competitors from the market and that those practices are anti-competitive and hurt farmers.
The programs pay distributors of Syngenta and Corteva programs only if they limit business with competing manufacturers, the FTC said. The FTC said the loyalty programs inflate prices for the pesticides even after patents expire and share some proceeds with distributors, inflating prices for farmers and consumers, and they deter distributors from dealing with generic manufacturers or even keep generics out of the market.
“Farmers are paying unnecessarily high prices for pesticides, on top of soaring costs for other inputs,” Miller said. “The defendants’ practices are unfair to smaller competitors and ultimately harm consumers.”
The lawsuit accuses the companies of violating the FTC Act and the Clayton Act and said the defendants’ conduct “constitutes deceptive and unfair practices” that violate the Iowa Consumer Fraud Act, as well as other states’ laws.
The FTC and the states in the lawsuit want the court to end the loyalty programs and grant equitable monetary relief, which would include restitution for farmers in Iowa, Miller’s office said.
“To encourage innovation, companies such as Syngenta and Corteva can initially develop, patent, and register active ingredients in their products and exploit their commercial potential for several years,” Miller’s office said. “After those protections expire, generic manufacturers may enter the market with products with the same active ingredients and relying on the same toxicology and environmental impact studies. This competition ordinarily leads to dramatic price reductions, benefiting farmers and consumers.”
According to the complaint, Syngenta and Corteva are undermining this system by paying incentive payments, or “rebates,” to distributors on one condition if they limit their purchases of comparable generic products. Distributors sell the products with branded ingredients to retail outlets, Miller’s office said.
The complaint said its primary focuses are Syngenta active ingredients azoxystrobin, mesotrione and metolachlor and Corteva active ingredients rimsulfuron, oxamyl, and acetochlor.
Azoxystrobin is a fungicide. Mesotrione, metolachlor, rimsulfuron and acetochlor are used as herbicides. Oxamyl is an insecticide and nematicide.
California, Colorado, Illinois, Indiana, Minnesota, Nebraska, Oregon, Texas and Wisconsin are the other states that are suing the companies.
Syngenta is based in Switzerland and is a subsidiary of Sinochem Holdings Corp. of China. Corteva is based in Indianapolis.
Iowa gave $1.2 million to Syngenta Corporation and $5.9 million to Corteva, Inc. and Subsidiaries in Research Activities Tax Credits in 2021, the Iowa Department of Revenue declared in February. Iowa legislators and Gov. Kim Reynolds passed a bill, H.F. 2317, this spring to reduce the amount of credit that can be refunded and remove computer use expenses from the kinds of expenses that qualify for the tax credit.