CCI finds reasons to probe Mahyco-Monsanto

CCI’s order cites prima facie violation of Sections 3(4) and 4 of the Competition Act, calling it ‘a fit case for investigation by the director general’

Photo: Ramesh Pathania/Mint
Photo: Ramesh Pathania/Mint

New Delhi: India’s antitrust regulator has decided to probe allegations that Mahyco-Monsanto Biotech India Pvt. Ltd (MMBL) was resorting to anti-competitive practices in the genetically modified (GM) cotton seed market.

The investigation will be carried out by the director general of the Competition Commission of India (CCI), the regulator said in a 10 February order made public on Wednesday.

MMBL, a joint venture between Mahyco Seeds Ltd and Monsanto Co., a global technology provider of GM seeds, licences its patented Bollgard II Bt cotton seed technology to 49 seed companies in India, in exc-hange for a trait or royalty fee.

The CCI’s order cited prima facie violation of Sections 3(4) and 4 of the Competition Act, calling it “a fit case for investigation by the director general”.

Section 3 of the Act refers to anti-competitive agreements and Section 4 deals with abuse of dominant position. The investigation will be completed within 60 days.

“The ‘order’ today is only a prima facie opinion and merely recommends an investigation. It is not a reflection of any final conclusions. It must also be noted that a member of the CCI has found no merit in the complaints filed with the CCI and has exonerated MMB,” an MMBL spokesperson said in an emailed statement.

In the CCI’s seven-member panel, one member put up a dissent note, saying that he did not find any reason to order a probe.

In its main order, the CCI noted that MMBL’s agreements with its licencees were “stringent and unfair”. It said MMBL can terminate its agreements with the licencees at any time if laws were passed to regulate trait fees. Such terms discouraged licencees from going to competitors of MMBL and restricted development of alternative technologies, the CCI said.

The CCI clarified that the order was only a preliminary finding.

In November 2015, the agriculture ministry asked the CCI to look into alleged monopoly practices by MMBL. Seed companies, including Nuziveedu Seeds Ltd (NSL), and its subsidiaries Prabhat and Pravardhan, also appealed to the commission for an investigation.

The ministry moved the CCI after several farmers’ organizations and lobby group National Seed Association of India (NSAI) alleged that MMBL was charging high trait fees or royalty for its patented Bollgard II technology, which protects cotton plants from pink bollworm, a pest.

The CCI’s 10 February order also allowed stakeholders like the NSAI to place its submissions to the director general.

“We will provide valuable inputs to the commission for a fruitful investigation”, said Kalyan Goswami, executive director of NSAI. “We are sure that very soon this will bring an end to monopoly practices that led to difficulties for the Indian seed industry and farmers,” he added.

The regulator recorded submissions from the ministry and the NSL that MMBL’s technology was used in more than 99% of the area under Bt cotton cultivation in the country.

The CCI reference came alongside a 7 December price control order by the central government, seeking to regulate cotton seed prices and trait fees.

MMBL challenged certain portions of the price control order, specifically those allowing the centre to determine trait or royalty fees, before the Delhi high court.

The price control committee was set up last month and is mandated to determine seed prices and trait fees by 31 March in time for the sowing of the kharif crop.