Probe eyes possibility of ‘co-ordinated behaviour’ in Big Ag

Canada’s Competition Bureau is investigating leading agriculture companies for allegedly attempting to drive a California-based online farm-supply retailer out of the Canadian market.

Documents filed in Federal Court show Federated Co-operatives, Cargill, Winfield United Canada, Univar Canada, BASF Canada Inc., Corteva and Bayer CropScience (and, by extension, Monsanto Canada) are all under investigation.

Investigators with the Competition Bureau filed the court documents as part of an application to acquire more documentation from the companies.

Farmers Business Network Canada Inc. (FBN) operates a digital ag platform under a membership model, allowing growers to buy memberships and provide data to the company in exchange for data-related services such as agronomic advice and price comparison tools.

Membership also allows farmers to purchase crop inputs from FBN, which according to court documents, “may offer relatively low prices compared to other retailers enabled by efficiencies from FBN’s business model.”

The company confirmed it made a complaint to the Competition Bureau in the fourth quarter of 2018.

Founded in 2014, FBN has been selling crop inputs through its e-commerce platform in the United States since 2016 and entered Canada in November 2017 when it purchased a Saskatchewan-based retailer, Yorkton Distributors.

A senior officer on a team of competition law officers at the bureau provided an affidavit as part of the court application.

“Some of these parties may have engaged in communications that are suggestive of co-ordinated behaviour in relation to FBN,” the affidavit read.

Furthermore, it said, “FBN is effectively unable to sell all branded crop protection products and is limited to sale of generic products, which represent a small minority of overall sales in Western Canada.”

The officer suggests this may impede or delay FBN’s successful expansion in the Canadian market — or cause them to exit it altogether.

‘Higher costs, less choice’

“I am aware of information that suggests that FBN may increase price competition (through both the price transparency tool and its e-commerce platform), and/or bring new and innovative products or services to growers, thereby increasing choice for consumers.”

“Accordingly, such practices by the targets may deprive customers of the benefits of competition in one or more markets, resulting in higher costs for crop inputs, less choice and/or fewer innovative products or services.”

The court application seeks to find records, including from Monsanto, “relating to the creation and implementation of a task force specifically in relation to Farmer Business Network Inc.”

Already, according to the documents, targeted searches have shown “approximately 450 documents produced by Monsanto Company and 100 documents produced by Bayer AG that include discussion of the potential competitive significance of FBN/affiliates, and other topics of relevance to the inquiry.”

The Competition Bureau first engaged the companies involved in the investigation in February last year, and informed their legal counsels in October that an inquiry had begun.

Corteva said it was aware of the Competition Bureau’s investigation, was reviewing the inquiry and intends to fully co-operate with the regulator.

Bayer also said it was co-operating with the bureau.

“We believe the actions we took in this matter fully comply with Canada’s competition law,” Bayer said.

In a statement, Cargill said it was fully co-operating with the Competition Bureau’s investigation.

“Cargill conducts business in a legal, ethical and responsible manner in each country where we do business – and Canada is no exception,” the company said.

BASF said in a statement it believes the company “has not contravened the Competition Act and (is) confident that we can address any concerns that the Commissioner of Competition may have in connection with the inquiry.”

The court documents say the companies have engaged in practices reviewable under Part VIII of the Competition Act. Under that section, millions of dollars in fines for infractions can be ordered.

— D.C. Fraser reports for Glacier FarmMedia from Ottawa. Includes files from Reuters.