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May 22, 2019

CCI Probe Reveals Monsanto Abused Dominant Position in India


Monsanto

Investigations by Competition Commission of India (CCI) has revealed Mahyco Monsant Biotech Ltd (MMBL) abused its monopolistic position in the market for Bt Cotton technology by imposing unfair license fee and executing pricing agreements solely for the purpose of overcharging farmers who use Bt Cotton seeds.

MMBL now acquired by major German drug maker, Bayer, is an equal joint venture of Mahyco, a Maharashtra-based entity and Monsato Holding Pvt. Ltd. It is in the business of selling genetically modified seeds to Indian companies. The point of contention arises from MMBL’s pricing policies especially its trait fees or licensing fees or technology fees. Complainants against MMBL’s pricing policies include the Government of India, Government of Telangana, All India Kisan Sabha and Nuziveedu. These complainants have been asked to file their replies to the investigation arm of CCI.

CCI started their investigation in 2015 after the agriculture ministry and Nuziveedu group filed complaints about MMBL abusing its dominant position in the Bt Cotton technology market. Monsato challenged CCI’s role as investigators in the Delhi High Court. CCI’s report says, “It has been shown that trait fee was linked with the maximum retail price of seed packets by MMBL just to extract surplus as much as possible from the end consumer of Bt Cotton seeds, i.e. farmers.”

CCI’s report also says MMBL has abused its dominant market position in several other instances in Haryana, Punjab and Rajasthan where there was no price regulation. CCI’s report has further states, “Charging different prices in different geographic locations in the light of local conditions especially when such variation is not related to costs can distort competition and is in the nature of third degree price discrimination exercised by a monopolist. There is no evidence of welfare enhancement of consumers on account of the price discrimination.” The local governments in Maharashtra and Andhra Pradesh had fixed trait fees. However, even here MMBL has charged higher trait fees.

CCI’s report further states MMBL’s monopolistic policies has resulted in no entry for competitors who could provide better deal to farmers.

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