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The Monsanto squeeze PDF Print E-mail
Monday, 22 February 2016 00:47
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Ultimately, it boils down to whether we want hi-tech

 

Though it is the prerogative of the Competition Commission of India (CCI) to probe the allegations of anti-competitive practices by Mahyco-Monsanto, what is interesting is that the primary complainant in one of the cases is the ministry of agriculture—so, not only has the Modi government imposed price controls on Bt cotton seeds, it buys the argument put forward by a handful of licensed sellers of Monsanto’s products that the US seeds giant is hurting the interests of Indian farmers. This is odd considering the facts—not only have Indian cotton farmers whole heartedly embraced Monsanto’s technology, the ‘trait’ fee or royalty that Monsanto charges is 1% of the cost of cultivation. At a time when, thanks to global warming, India needs more seeds that are heat/drought/flood resistant, it is critical not to disincentivise firms like Monsanto—at $1.7billion, its annual R&D-spend is larger than that of the Indian government. It is also worth keeping in mind—as the CCI acknowledges—that while there were four other providers of Bt cotton technology in India apart from Monsanto, with none of them doing well, three of the four opted to enter into sub-licensing agreements with Monsanto.

This is why the CCI needs to be careful in its investigation—Monsanto may be a dominant player by way of its market share, but this is because the competitors fell by the way side. The real issue is not whether Monsanto’s fees are high—though that is what the dispute between Monsanto and its licensees is about—but whether Monsanto is abusing its dominant position. Even here, as CCI’s dissenting Member MS Sahoo has pointed out, given the central government now plans to regulate the price of the seeds and also trait fees under the Essential Commodities Act, the issue of charging a high price becomes redundant. Apart from the price, there is the issue of whether Monsanto’s agreements with its licensees are anti-competitive. Monsanto sells seeds directly through Monsanto Holdings, through its JV with Mahyco and through various licensees—Monsanto has denied the charge that its agreement with these two firms is different from that with the other licensees, and the veracity of that should have been checked by the CCI at the initial stage itself since, if true, many of the charges get dismissed. It has also been alleged that Monsanto puts restrictions on the licensees dealing with the products of other companies—surely this is common practice with any company that is licensing technology after having spent billions in R&D. CCI needs to address this issue carefully since its ruling will have implications in other areas as well. Even before the investigations, CCI appears to have made up its mind—in its ruling authorising an investigation, it says “the Commission notes that imposition of such conditions … not only discourages the sub-licensees from dealing with the competitors, but also amounts to restriction of development of alternate Bt cotton technologies”. It also appears to have made up its mind on the trait fees—“charging of trait fee … apparently has no economic justification … and appears to be unfair”. While the CCI will, presumably, base its final decision on the findings of the investigation—in any case, its order can be challenged in court—the government seems to have already made up its mind in the case of both Bt cotton and other GM crops; this is in sharp contrast with the way China is embracing GM, to the extent of trying to buy up a leading GM firm, Syngenta.

 

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