CCI orders investigation against Monsanto on govt complaint

The Competition Commission of India (CCI) has ordered a detailed probe against Monsanto as it found the global agricultural giant to be violating competition law in the market of Bt cotton technology in India. The move follows a complaint filed by the agriculture ministry and three Indian seed companies.

The majority ruling, passed by six out of seven members of CCI, recommends investigation against Monsanto, Monsanto Holdings Private Limited (MHPL), Maharashtra Hybrid Seeds Company (Mahyco) and MMBL (Mahyco Monsanto Biotech India) for forcing anti-competitive agreements and abusing their dominant position in the country's Bt cotton seeds market.

“The termination conditions of the sub-licence agreement entered in between MMBL and the informants are found to be excessively harsh and do not appear to be reasonable as may be necessary for protecting any of the intellectual property rights… Such agreements discourage and serve as a major deterrent for the sub-licencee from exploring dealing with competitors,” said the fair trade regulator.

Apart from the agriculture ministry, the other informants were three Indian companies — Nuziveedu Seeds, Prabhat Agri Biotech and Pravardhan Seeds.

In its response, MMBL said it was important to point out the CCI’s order was only a prima-facie opinion recommending an investigation. “It is not a reflection of any final conclusions. It must also be noted that a member of the CCI found no merit in the complaints filed with the CCI and has exonerated MMBL.”

MMBL’s statement added: “We are evaluating the order and our options in respect thereof. MMBL conducts its business in an honest, transparent and respectful manner, and it remains confident this will be evident after all relevant information has been considered by the CCI.”

 

According to the CCI, the Bt cotton technology sub-licensed by MMBL is used in 99 per cent of the area under Bt cotton cultivation in India. “The competitors of MMBL do not seem to pose effective competitive constraints on MMBL and there is huge consumer dependence.”

MMBL is a 50:50 joint venture formed between MHPL and Mahyco and is engaged in sub-licensing of Bt cotton technology of Monsanto in India. MHPL is a 100 per cent subsidiary of Monsanto in India and it is engaged in marketing of Bt cotton hybrid seeds (under trade name Paras) and other field crop seeds.

It also holds 26 per cent stake in Mahyco.

“Charging of trait value payable on the basis of MRP of the seed packet apparently has no economic justification in light of the fact that performance of the Bt cotton crop depends not only on the Bt cotton technology, but also on other factors like genetic composition, climatic conditions etc and appears to be unfair,” the commission said. The ‘trait value’ is the estimated value for the trait of insect resistance conferred by the Bt gene technology.

“Based on comparison of fees equalised to per-acre basis across countries, MMBL has contended the trait value charged in India is the lowest in the world. However, the same does not appear to be a valid comparison as per-acre cost/price would vary, inter-alia, based on the type of soil and weather conditions,” it added.

The ministry filed a complaint with CCI as it had received many representations/complaints from different stakeholder groups — Bharatiya Janata Party Kisan Morcha, Andhra Pradesh; Bharathiya Janatha Party Kisan Morcha, Telangana; and National Seed Association of India, alleging abuse of dominant position by MMBL.

MMBL is also locked in a legal battle with the government of India over a notification issued by the agriculture ministry last year, which brought genetically modified cotton seeds under the seeds price control order.

The company had challenged the ministry’s notification in the Delhi High Court. The court had on February 5 refused to stay Monsanto’s plea to put the order on hold and given the Centre time till March 4, the next date of hearing for a counter-affidavit.

According to the agriculture ministry, the decision to put Bt cotton seeds under price control was taken in view of farmers finding the seeds ‘to be highly priced’ and the need to bring ‘uniformity’ in their prices across the country.

The Centre had said in its submission to the court that over the years,  the efficacy of genetically modified Bt cotton in resisting pest attacks has declined and, as a result, royalties charged by a technology giant such as Monsanto must also come down.