Mahyco Monsanto Biotech Ltd (MMBL)
The investigation arm of the competition watchdog has found Mahyco Monsanto Biotech Ltd (MMBL) has abused its dominant position in the market for Bt Cotton technology by charging unfair licence fee and entering into pricing agreements directly aimed at overcharging farmers who use Bt Cotton seeds.
MMBL is an equal joint venture of Maharashtra-based seed company Mahyco and Monsanto Holding Pvt Ltd which has been acquired by German drugmaker Bayer. It sells genetically modified seeds to many Indian companies and charges a licensing fee called ‘trait fee’, or technology fee.
The Competition Commission of India (CCI) has asked the company and the complainants, including government of India, Telangana government, All India Kisan Sabha and Nuziveedu, to file their replies. The commission will consider the report of the investigation arm as well as the response of various parties before taking a view on the matter.
Complaint Filed in 2015
In 2015, the agriculture ministry and Nuziveedu group filed a complaint with the CCI against Monsanto Group alleging abuse of its dominant position in the Bt Cotton technology market, after which the investigation was started. Challenging the role of CCI, Monsanto had filed cases in the Delhi High Court.
“It has been shown that trait fee was linked with the maximum retail price of seed packets by MMBL just to extract surplus as much as possible from the end consumer of Bt Cotton seeds i.e. farmers,” said the report by the director general (DG) of CCI, which has been reviewed by ET. CCI and Monsanto India did not respond to emailed queries at the time of going to press.
The report also says there are multiple instances where MMBL abused its dominant position in this market, most notably by charging higher trait fees from seed producers in Haryana, Punjab and Rajasthan compared with others as there was no price regulation in these states.
“Charging different prices in different geographic locations in the light of local conditions especially when such variation is not related to costs can distort competition and is in the nature of third degree price discrimination exercised by a monopolist. There is no evidence of welfare enhancement of consumers on account of the price discrimination,” it said. Further, MMBL also charged a higher trait fee in states such as Maharashtra and Andhra Pradesh where the government had fixed trait fees “on the pretext of pendency of litigation”.
By BOA Bureau