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How Monsanto Outfoxed the Obama Administration

The inside story of how the government let one company squash biotech innovation, and dominate an entire industry.

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“Monsanto had reached a place of sufficient dominance that it no longer needed its restrictive agreements, and they were just attracting trouble,” said the lawyer in the state attorney’s office. “So it loosened its practices, giving seed companies more freedom to make their own choices. But it didn’t change the direction of the market — Monsanto had already locked that in.”

The seed business owner from the Midwest confirmed that Monsanto adopted a more benevolent face after the states began investigating in 2007. When asked whether its new agreements were fair, he paused. “There are a lot of ways Monsanto can use its power to influence you,” he said. “You don’t need a written contract.”

When contacted by Salon, Monsanto declined to comment beyond  its initial public statement announcing the DOJ’s decision.

Several experts agree that the strongest case the DOJ could have brought against Monsanto would focus on how it has used its monopoly in one market — the provision of genetic traits — both to exclude rivals and to gain advantage in another market: the breeding and retail of seeds.

They note that Monsanto’s practices resemble conduct by Microsoft and Dentsply, two dominant firms that the Justice Department sued for antitrust violations in the late 1990s. Both companies had used contracts to restrict competitors’ access to the platforms they needed to distribute their technologies. In at least one way Monsanto enjoys still greater power than even Microsoft: because it now owns many of these intermediaries – the seed breeders and retailers – it no longer needs written agreements to favor some companies over others. It can effectively accomplish the same outcome without the paper trail.

Lawyers say winning such a case would have been tough but not impossible. “A successful case against Monsanto would have required very smart litigating,” said Peter Carstensen, a professor at the University of Wisconsin Law School and antitrust specialist who has studied the seed industry. “(The) Microsoft (case) required an extraordinarily able set of lawyers.”

Some experts also say the Justice Department was unduly cautious and ultimately outmaneuvered by the company. John Hinderaker, a lawyer who litigated against Monsanto 10 years ago in a private antitrust case, says that the company, by contrast, has been especially daring.  “Most companies would draw the line at certain practices, but Monsanto had a different attitude towards risk,” he said. “They’d look at a legal gray area and decide to test it. They were aggressive and strategic.”

Hinderaker notes that early legal wins against poorly resourced farmers fortified Monsanto in later battles, adding, “Monsanto has been very lucky in its opponents.”

Carstensen, a former DOJ attorney, believes antitrust officials may have been reluctant to wage a close fight given Monsanto’s political connections. “There was a good case to be made, but at the end of the day nobody was prepared to bite the bullet and move forward,” he said.

The public will suffer the costs of Monsanto’s capture of almost total control over much of the U.S. seed business. Since 2001 the company has  more than doubled the price of soybean and corn seeds, whose crops are used in foods ranging from cereal and pizza to chocolate and soda. In 2008  Monsanto officials said farmers should expect seed prices to keep rising.

“Monsanto has used its power to raise prices and retain control over genetics at the public’s expense,” says Neil Harl, agricultural economist at Iowa State University who has studied the seed industry and antitrust law for decades and consulted with the Iowa attorney general’s office during the state investigation.

 
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