How Monsanto Outfoxed the Obama Administration
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Alarmed by the fact that they were losing access to many key seed gene pools and seed breeders, biotech competitors – including DuPont, Dow and Syngenta – scrambled to keep up, grabbing suites of seed companies to secure their own arsenals.
Once mimicked by its rivals, Monsanto’s strategy redrew the industry. Competition and variety have dwindled as a result. Since the mid-1990s, the number of independent seed companies has shrunk from some 300 firms to fewer than 100. Many businesses not bought out directly were pushed out by bankruptcy. And even these figures underestimate Monsanto’s power, as many of the independent companies that remain now must compete with the same company on which they also depend for their supply of genetic traits, a fact that constricts how freely they can select or market others’ products.
“My big concern is that Monsanto can go out and undercut us in the marketplace through one of its own seed brands,” said the owner of a family seed business in the Midwest who asked not to be identified because he relies on Monsanto for genetic traits. “It puts us in a very vulnerable position. It could squeeze us any time.”
Documents obtained from the Texas attorney general’s office through a public information request show the states examined Monsanto’s conduct broadly. Their materials included academic research on Monsanto’s bundled pricing and law journal articles on how to police dominant firms with intellectual property rights for anticompetitive conduct. The documents suggest that the states were trying to gauge not just whether Monsanto’s contracts were unlawful, but – more expansively – whether the company had used its dominance illegally to maintain a monopoly.
The Midwest seed business owner said that DOJ officials, by contrast, appeared to be most focused on the mechanics of Monsanto’s licensing agreements, phoning him several times in 2010 to discuss the issue. “They asked very specific questions about [Monsanto’s] contracts, the conversation was very focused on this one point,” he said. “They did not try to understand the layout of the seed industry, or any larger issues.”
When contacted, a spokeswoman for the DOJ acknowledged only that the antitrust division had shut its investigation into “possible anticompetitive activity” in the seed industry, due to “marketplace developments that occurred during the pendency of the investigation.” The spokeswoman would not detail these developments. “We believe it would not be appropriate to comment further,” she said. The state attorneys general who initiated the probe five years ago also closed their inquiry and have chosen not to comment.
Academics and private attorneys who consulted with the government during its investigation concede that an antitrust lawsuit against a company as strategic and politically connected as Monsanto would not have been a guaranteed win. Few firms have as methodically mastered the revolving door between Washington and industry as Monsanto – whose former employees and lobbyists frequently enjoy top posts at agencies like the Food and Drug Administration and on legislative committees – or groomed as deep ties with both Republican and Democrat administrations. The company spent close to $6 million on lobbying in 2012, more than any other agribusiness organization, and three times the sum dished out by the second-highest paying firm, Archer Daniels Midland.
Those close to the investigation also note that it became easier for officials to justify inaction because Monsanto cleaned up its act as soon as authorities came knocking. Seed companies say Monsanto began loosening its licensing agreements in 2008, less than a year after the state attorneys general opened their inquiry. Months after the Justice Department followed suit in 2009, Monsanto announced it would allow farmers to continue using its leading soybeans, Roundup Ready 1, even after its patent expired in 2014. This gesture — at least in theory — opens the market to generic competition.