Corteva must end pesticide loyalty program and pay states $35 million in FTC settlement

Corteva must dismantle a pesticide loyalty program and pay $35 million to 12 states under a settlement with the Federal Trade Commission and state attorneys general. The FTC announced the settlement Sept. 28. The agency’s press release says the agreement was filed in U.S. District Court for the Middle District of North Carolina.

The states that joined the case are California, Colorado, Illinois, Indiana, Iowa, Minnesota, Nebraska, Oregon, Tennessee, Texas, Washington and Wisconsin. The payment goes to those state plaintiffs, according to the FTC.

What the order requires

The order runs for 10 years. During that time Corteva may not condition payments or other benefits to a customer on the customer buying a high share of its requirements for a pesticide active ingredient from Corteva. It also may not limit a customer’s purchases of generic equivalents.

The FTC said the order bars Corteva from conditioning payments on distributors buying 50 percent or more of their pesticide requirements from the company, and from limiting generic purchases to under 50 percent. It also prohibits volume-based programs that replicate the barred loyalty schemes.

Corteva is further prohibited from penalizing or threatening customers who reject those conditions or who do business with competing suppliers, including generic manufacturers, according to the FTC.

The order covers all of Corteva’s post-patent active ingredients, which extends beyond the three example ingredients named in the original complaint, the FTC said.

The allegations

According to the FTC, the loyalty program limited distributors’ ability to do business with generic competitors that seek to enter the market after Corteva patents have expired.

The FTC and states sued Corteva in September 2022. They alleged that the company paid distributors to block competitors from selling cheaper generic versions of its pesticides after Corteva’s patents expired. Regulators said the program kept prices high for farmers.

“This settlement will do away with unfair corporate practices that have hurt farmers by impeding the sales of lower-priced products,” said David Shaw, principal deputy director of the FTC’s Bureau of Competition.

The FTC and state plaintiffs filed an agreed stipulated order with the court on Sept. 25, according to the FTC.

State reaction

Minnesota will receive $1.25 million of the total, according to Attorney General Keith Ellison’s office. Ellison said in a statement that the case is “another example of illegal antitrust practices that have gone on for far too long that have been stifling our economy and prosperity while enriching multinational corporations and billionaires.”

The Minnesota attorney general’s office said the settlement carries a 10-year compliance oversight period. His office said the Corteva agreement is Ellison’s fourth major agriculture antitrust settlement in five months. The others involved John Deere, egg producers and AgriStats.

What remains pending

The FTC’s case against co-defendant Syngenta is still in litigation. The agency said similar allegations apply to Syngenta’s own post-patent loyalty program.

The FTC titled its announcement as a win of protections to lower pesticide prices for American farmers in the case against Corteva.