Syngenta Crop Protection and Corteva Inc. asked a federal court to dismiss a lawsuit brought by 10 state attorneys general and the Federal Trade Commission that alleged the companies paid distributors to block competitors from selling less-expensive generic products to farmers.
In two separate motions filed with the U.S. District Court for the District of Middle North Carolina, the companies defended the legality of so-called loyalty programs at the center of the complaint.
The FTC and the states have alleged distributors only get paid if they limit business with competing manufacturers. Such arrangements, the complaint said, are “cutting off” competition and allowing the companies to “inflate their prices and force American farmers to spend millions of dollars more for their products.”
In particular, the lawsuit alleged Syngenta has monopoly and market power on the fungicide azoxystrobin, and the herbicides mesotrione and metolachlor. The suit cites Corteva’s herbicides rimsulfuron and acetochlor and the insecticide and nematicide oxamyl.
COMPANIES: LOYALTY DISCOUNTS “COMMON, LAWFUL”
“Plaintiffs ignore the fact that loyalty discounts, which come in many forms are not only ‘extremely common’ but also ‘presumptively lawful in all but a few carefully defined circumstances,'” Corteva said in a motion to dismiss.
“Exclusive dealing arrangements offer numerous procompetitive benefits, such as maintaining customers’ incentives to invest in a manufacturer’s products, ensuring consistent purchases by customers over time and reducing free riding by customers and competitors.
“Plaintiffs also elide the fact that Corteva’s loyalty programs, which have been in place for many years, relate to a small number of its products, have significantly decreased prices to its customers over many years, and have successfully encouraged its customers to invest in services, stewardship and support for Corteva’s products.”
Syngenta said in its motion to dismiss that the lawsuit advances an “unprecedented and unfounded theory” that an industry-standard rebate program offering a “modest, optional discount” to customers to incentivize increased purchases violates antitrust laws.
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