The Organization for Competitive Markets filed its opposition to Monsanto’s proposed acquisition of the Delta & Pine Land Company.  The acquisition would, if allowed, tremendously concentrate the transgenic cotton trait and cotton seed markets in Monsanto’s hands.

“Monsanto’s past history of consolidation and charging excessive technology fees in other seed markets shows this deal would harm cotton farmers across the United States,” said Keith Mudd, OCM President. 

OCM’s letter to the U.S. Department of Justice Antitrust Division is below.

March 9, 2007

The Honorable Thomas O. Barnett
Assistant Attorney General
Antitrust Division
United States Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530

Re: Monsanto’s proposed acquisition of Delta & Pine Land Company

Dear Assistant Attorney General Barnett:

The Organization for Competitive Markets (OCM) is an independent, nonpartisan, nonprofit group of farmers, ranchers, academics, attorneys, and policy makers.  Preserving and protecting  competitive markets in agriculture is our central goal, and gives rise to the organization's name. 

OCM strongly opposes Monsanto Company’s proposed acquisition of Delta & Pine Land Company, which would devastate competition in the transgenic cotton trait and cotton seed markets, with ripple effects in other crop markets, such as corn and soybeans, and to downstream industries that rely on corn, cotton, or soybeans as inputs. 

Monsanto is the dominant developer and licensor of transgenic seed traits used in cotton.  Transgenic traits allow seed companies to produce seeds that grow plants able to resist insects and tolerate certain herbicides.  In the cotton transgenic seed trait market, Monsanto holds a 100% market share of insect resistant traits, a 95.1% market share of herbicide tolerant traits, and a 99.8% market share of stacked traits (combined herbicide tolerance and insect resistance).    Monsanto’s monopoly power in this market is evidenced by its ability to impose significant increases on farmers for seeds containing Monsanto technology.  For example, according to Center for Food Safety, the cost of cotton seed has risen 3.4-fold from 1995 to 2005, due primarily to rising technology fees charged for transgenic traits.  These fees represent about 70% of the price of a bag of seed and make up a significant portion of farmers’ costs.

Delta and Pine Land seed accounts for over half of all cotton acres planted in the U.S., and enjoys an even larger market share in the South Central and Southeast regions, where transgenic seed traits are highly valued.  Delta and Pine Land also is a partner with Monsanto competitors seeking to develop competing cotton traits that would provide much needed alternatives for cotton farmers.  By acquiring Delta and Pine Land, Monsanto will remove the key partner of its competitors midstream in their efforts to develop and commercialize transgenic seed traits that will compete with Monsanto’s monopoly products.

The proposed transaction has both horizontal and vertical anticompetitive effects.  Adverse horizontal effects would result from the ability of Monsanto to derail the joint development efforts between Delta and Pine Land and Monsanto competitors.  Despite Monsanto’s public promises to continue working with its competitors in their trait development efforts once it acquires Delta and Pine Land, a captive Delta and Pine Land under Monsanto’s control simply has no economic incentive to work with others to develop or sell traits that will compete with Monsanto’s own existing or future products.  As a consequence, the proposed acquisition would eliminate competition between Monsanto and rival trait developers, to the detriment of farmers and consumers.

Anticompetitive vertical effects would result from the foreclosure of Monsanto trait development competitors from a significant portion of the finished seed market.  A captive Delta and Pine Land would have the ability and incentive to foreclose competing trait developers from access to Delta and Pine Land seed varieties.  Because Delta and Pine Land has a 50% U.S. market share of the highly concentrated cotton seed market and a significantly higher share in the South Central and Southeast regions, competing trait developers would not have sufficient non-Delta and Pine Land outlets to license their cotton biotech seed traits to justify their significant R&D expenditures.  This foreclosure would harm both farmers and consumers through less innovation and higher prices. 

For these reasons, OCM concludes that Monsanto’s proposed acquisition of Delta and Pine Land will eliminate market competition in the cotton seed and transgenic cotton seed trait markets, to the detriment of independent family farmers and consumers, who will be deprived of increased choices and lower prices resulting from competition.

America was made strong by guaranteeing fair, open and competitive markets.  Allowing Monsanto to cement its monopoly will have a dramatic, negative impact on farmers, as well as on rural communities, the environment, food quality, food safety, and consumer prices.  This acquisition should be blocked by the Department of Justice.

Respectfully,

Keith Mudd,
President