Monsanto held guilty of monopolistic practices

The Director-General Investigation and Registration (DGI&R) has held Mahyco Monsanto Bio-Tech (India) guilty of monopolistic trade practices on account of charging an exorbitant trait fee "" Rs 1,250 for every 450 gm packet "" for Bollgard Technology (Bt) cotton seed in India.

According to DGI&R, the investigative arm of Monopolies & Restrictive Trade Practices Commission (MRTPC), Mahyco Monsanto has failed to explain the rationale for the high fee.

"The benefits accruing to the farmers cannot be the basis for fixing the trait fee per packet. The reason for charging such an exorbitant trait fee appears to be the monopolistic position enjoyed by the respondent in respect of Bt cotton seeds," according to a report submitted by DGI&R joint secretary S Chandra.

According to the report, the cost of production for a packet of seeds ranges between Rs 300 and Rs 500.

The MRTPC had on October 20 last year directed DGI&R to investigate the allegations of unfair trade practices under Section 29 (o) of the MRTP Act, 1969, against Mahyco Monsanto, a 50:50 joint venture between Indian company Mahyco and multinational Monsanto.

The company has already slashed the price of Bt cotton seeds from Rs 1,250 to Rs 900 for 450 grams.

While claiming that it had been incurring an expenditure of more than $500 million (Rs 2,200 crore) every year on research and development over the past three years, the company had argued that there was neither distortion of competition nor any unjustified cost imposed on farmers.

It said that Bt cotton needs less pesticides and as a result, the farmers's expenses have gone down.

At present, there were only three Indian and two foreign Bt genes companies in the process of research and commercialisation. And among the list of 36 institutions and 34 companies engaged in R&D of transgenic crops, some are the sub-licensees of Mahyco Monsanto, it stated, adding "till such time such companies or institutions are not in a position to enter the market, the respondent (Mahyco Monsanto) is in a position to charge for this technology arbitrarily and unreasonably."

Alleging exploitation of farmers, Andhra Pradesh Ryotu Sangam President Kolli Nageswara Rao, in his complaint to MRTPC, had said Mahyco Mansanto had fixed high selling prices for providing technology through seed companies.

Besides, there was no justification for collecting such a high trait fee which was in the nature of royalty, he alleged.

According to Rao, due to exorbitant high trait fee a large number of poor farmers were being driven towards grey market where the seeds were being sold for Rs 500-800 per packet.