Bayer Faces Lawsuit Over Alleged Monopoly on US GMO Corn Seeds
Federal Lawsuit Highlights Anti-Competitive Practices in US Seed Industry
By Tom Polansek
CHICAGO, May 27 (Reuters) - Bayer used illegal and anti-competitive practices to monopolize the U.S. market for genetically engineered corn seeds, reaping "hundreds of millions, if not billions, of ill-gotten dollars," according to a federal lawsuit that adds to legal troubles plaguing the Germany-based company.
The lawsuit filed by Latham Quality, a family-owned seed company based in Iowa, targets the highly concentrated U.S. seed industry as President Donald Trump has said his administration will address risks from anti-competitive behavior in food supply chains.
The Department of Justice said last week that Bayer removed potentially anti-competitive provisions from a loyalty program for independent seed companies that license its technology to produce seeds.
U.S. crop farmers have struggled with high costs of seeds, fuel and fertilizer, and are facing a fourth straight year of shrinking margins.
Allegations Against Bayer
Latham alleged Bayer raised costs for farmers and independent seed companies by controlling the market for corn seeds engineered to resist its widely used weedkiller Roundup, according to its lawsuit filed in the U.S. District Court for the Eastern District of Missouri.
The civil lawsuit, which was filed last month and made public on Tuesday, proposed a class action and sought treble damages that Latham and similar companies allegedly sustained, according to court documents.
"Bayer has the power to control market prices and exclude competition," the lawsuit said. "In fact, it does so."
Bayer's Response
Bayer, which acquired U.S. seed producer Monsanto in 2018, said on Wednesday it believes the allegations lack merit and that it will respond to them in court. The company said it competes fairly in all facets of its agricultural business and was in compliance with applicable laws.
"The crop input and corn seed markets are competitive, fair and diverse," Bayer said.
Bayer is already facing thousands of other lawsuits alleging that Roundup causes cancer.
'STAY 100% LOYAL'
NK603 Corn Seeds and Market Control
The new lawsuit said Bayer sought to prevent competitors from developing generic versions of corn seeds known as NK603, which Bayer controls. Nearly all genetically engineered hybrid corn seeds sold in the U.S. carry the NK603 trait that resists Roundup, according to the complaint.
The U.S. government estimates that about 92% of corn acres are produced with herbicide-tolerant seeds.
Demand for NK603 has remained significant since Bayer's last patent on it expired in 2022, yet no viable competition has emerged, the lawsuit said.
"This is the direct result of Bayer's anti-competitive conduct to maintain its monopoly," the complaint said.
Impact on Independent Seed Companies
Bayer prohibited independent seed companies from using its genetic seed material to develop a competing generic corn product even after the patent on NK603 expired, according to the lawsuit.
Bayer, which also has a large pharmaceutical business, continued to charge royalties on seed grown from its genetic material to companies like Latham and raised licensing fees, the lawsuit said.
Latham licensed from Bayer or Monsanto the right to include NK603 in corn seeds that Latham produced and distributed to farmers. Latham then started working on its own corn seeds that would have competed with Bayer's products, prompting a warning from a Bayer representative to "stay 100% loyal to Bayer," according to the lawsuit.
When Latham did not stop its efforts, sales representatives for Bayer brands retaliated by using non-public information to steal the company's business, leaving Latham on the verge of bankruptcy, the lawsuit said.
Industry Impact and Financials
"Unfortunately, many independent companies are going out of business as these multinational companies have become more powerful and frankly predatory," John Latham, president of Latham Quality, told a U.S. Senate Judiciary Committee hearing on competition in the seed and fertilizer sectors in October.
In the first quarter, Bayer reported earnings in its Crop Science unit, which includes seeds, jumped 17.9% to 3 billion euros ($3.49 billion).
($1 = 0.8601 euros)
(Reporting by Tom Polansek; Editing by P.J. Huffstutter and Bill Berkrot)
