This is a 'Conspiracy' issue which is amongst the most significant in its' implications to all living things of the Earth. There looms a time when one will be required to pay for the back yard vegetable garden as they now control all 'patents' and trade rights to seeds. The genetic alterations are wreaking havoc on native crops and causing catastrophes the world over. One does well to save seeds from the garden each year to avoid the genetically altered forms they introduce in stores each year. Strains that have been a staple of humans and animals alike are being rendered extinct from earth in their grab for power in this field of science.
Pharmacia has since acquired Montsano's agriculture division including the GM seed technology.
January 6, 2004
Questions Seen on Seed Prices Set in the 90's
By DAVID BARBOZA
T. LOUIS — Senior executives at the two biggest seed companies in the world met repeatedly in the mid- to late 1990's and agreed to charge higher prices for genetically modified seeds, according to interviews with former executives from both companies and to court and other documents.
The Monsanto Company and Pioneer Hi-Bred International Inc. acknowledge that their executives met to discuss genetically modified seeds. Monsanto also said the companies discussed prices, but added that they were engaged in legitimate negotiations about changes to an existing licensing agreement, not illegal price fixing.
Interviews with former and current executives of major seed companies, along with company documents, however, show that through much of the 1990's Monsanto tried to control the market for genetically altered corn and soybean seeds. Monsanto spent billions in the 1980's to invent specialized seeds and sold the rights to make them to big seed companies like Pioneer.
More than a dozen legal experts contacted by The New York Times say that if the goal of the talks between the rivals was to limit competition on prices, they would have violated antitrust laws.
The talks, which occurred from 1995 to 1999, involved licenses that let Pioneer sell altered seeds developed by Monsanto, which is based here. In those talks, according to interviews with dozens of executives and court and other documents, the companies discussed prices, swapped profit projections and even talked about cooperating to keep the prices of genetically modified seeds high.
The talks involved top executives at both companies, including Robert B. Shapiro, then Monsanto's chief executive, and Charles S. Johnson, then Pioneer's chief executive, as well as Richard McConnell, now president of Pioneer, and Robert T. Fraley, now Monsanto's chief technology officer, according to company officials and documents. Together, Pioneer and Monsanto control about 60 percent of the nation's $5 billion market for corn and soybean seeds.
Also in the late 1990's, Monsanto pressured at least two other big seed companies to coordinate their retail pricing strategies with Monsanto's, former chief executives at those companies said. The executives, who ran Novartis Seeds and Mycogen, said they rejected Monsanto's entreaties as anticompetitive and potentially illegal.
Analysts estimate that more than $10 billion worth of genetically altered seeds have been sold in the United States since they were commercialized in 1996. Monsanto and Pioneer did not have to succeed in actually raising retail seed prices to have violated the Sherman Antitrust Act, legal and economic experts say; just agreeing to coordinate prices is against the law.
Companies found to have violated federal antitrust law could be subject to criminal fines and civil class-action litigation. In the civil lawsuits, courts can award triple monetary damages.
"If they're talking to Pioneer about raising the ultimate price to the farmers, that's illegal," said Austan Goolsbee, a professor of economics at the University of Chicago and a former Justice Department consultant on antitrust issues. "Monsanto shouldn't care about the final price. They should only care about the royalty payments they receive from Pioneer."
Royalty payments were at the heart of the matter. Before it realized how successful altered seeds would be, Monsanto sold the technology to some companies, including Pioneer, for relatively modest sums. When the seeds proved to be a hit, Monsanto tried to renegotiate many of those deals to ensure that the seeds sold for higher prices, executives and records show.
Monsanto said it brought up those early agreements only in the context of negotiating a licensing deal with Pioneer for new seeds that Monsanto was developing.
"Monsanto did offer to expand and revise existing licenses with Pioneer," Lori J. Fisher, a Monsanto spokeswoman, said in an e-mail message. "In the context of a potentially new license for technology, it is absolutely within the law to discuss the price and the means of compensation to the licensing party."
Pioneer, a division of DuPont, also denied that the discussions were used to fix prices. "We set our own prices," it said in a statement. "We do it independently, and without consultation with our competitors." It added that it believed that all of its talks with Monsanto about technology licensing were "legitimate and appropriate business negotiations" intended to benefit its customers. "Pioneer at no time engaged in illegal or inappropriate activity regarding the prices of our products," it said.
Some leading antitrust experts, however, said the talks resembled an effort to suppress competition on retail prices for seeds, though they cautioned that they had not seen documents in the case.
Before Monsanto struck the 1992 and 1993 licensing agreements with Pioneer, it had monopoly rights to its technology and could set any price it wanted. But once Pioneer bought the licenses, it became Monsanto's competitor and, legal experts say, the companies were no longer supposed to talk about how much to charge.
"Once you've created the competition," said George Hay, a law professor at Cornell University, "you can't take other steps to snuff it out."
The Justice Department is already looking into whether Monsanto engaged in anticompetitive action in the herbicide market, which it dominates with its Roundup weed killer.
The department is aware of the seed pricing talks, according to government officials. But it is unclear if a formal inquiry has begun. A department spokeswoman declined comment.
And a group of farmers filed a class-action lawsuit against Monsanto in 1999, accusing it of several misdeeds, including seeking to organize a cartel to control the market for biotech seeds. In September, a federal judge here dismissed some claims, but not the accusation of price fixing. The farmers' lawyers have appealed the judge's rulings.
Monsanto began its work on seeds in the 1980's, when it applied the emerging science of genetic engineering to agriculture. One idea was to develop soybeans impervious to Roundup, which would let farmers attack weeds without killing crops. Another idea was to make a type of corn with its own insect repellent, to save the cost and trouble of killing pests.
The company spent hundreds of millions of dollars on these and other projects, and when the first altered seeds were ready for market, it sold the rights to produce and market them. Pioneer was one of the first to sign up, paying $450,000 in 1992 for nonexclusive rights to altered soybean seeds. In 1993, Pioneer paid $38 million for nonexclusive rights to the biotech corn.
Monsanto officials initially viewed the deals as a vote of confidence in biotechnology, former executives said. But soon after, some senior executives complained that the technology had been sold too cheaply.
"I left in '93, and they tried to undo the deal," said Geert Van Brandt, a former Monsanto executive who helped negotiate the 1993 agreement. "They wanted more money; they wanted to have their cake and eat it, too."
By 1995, Monsanto revamped its licensing program to what some executives called a value capture system to reap bigger profits. Under this system, companies that licensed the technology had to require farmers to sign a grower licensing agreement that forbade them to replant seeds saved from harvest. Monsanto also required the companies to charge a technology fee for every bag of biotech seed; licensees were to collect the fee and pay it back to Monsanto.
Most big seed companies — including several that Monsanto has since acquired — agreed to use the system, which legal experts say is a legitimate exercise of Monsanto's licensing and patent rights.
But one major company was absent from the program: Pioneer, which already had the right to sell Monsanto's altered soybeans and corn. Worried that Pioneer might undercut prices being charged by other licensees, Monsanto asked Pioneer to renegotiate the 1992 and 1993 deals, according to executives involved in the talks.
"We bought Roundup soybeans for about $500,000," said Thomas N. Urban, the former chairman and chief executive of Pioneer. "They hated us. Every time we had a meeting, they'd say, `You need to pay us more.' We said, `Why?' "
Monsanto executives wanted to make their pricing system an industry standard, according to former industry executives.
"We had commercial concerns about somebody willfully trading away the value of the technology," said Arnold Donald, Monsanto's former president and a leading figure in the Pioneer negotiations. "If Pioneer and Asgrow went out and charged a normal seed price and didn't put any value on the technology, in that scenario, we have no value."
Asgrow is the nation's biggest soybean seed producer; Monsanto bought it in 1997 for $240 million. Mr. Arnold said he believed that what Monsanto did was legal.
Pioneer, however, was reluctant to go along, according to current and former Pioneer executives, because it saw no advantage in collecting a separate fee for its rival and because it worried about offending customers by adopting the grower agreement, effectively forcing them to buy new seed every year.
But former executives who were briefed on the talks say that Pioneer considered acceding to Monsanto's proposal in exchange for more advanced seeds and for getting the underlying genetic engineering expertise, called enabling technologies, that Pioneer could use to develop new seeds by itself.
Monsanto balked at sharing that technology, according to lawyers and executives. Instead, it offered other incentives, including $25 million, if Pioneer would adopt the grower agreement and technology fee in 1995, according to lawyers. At one point, Monsanto also offered to let Pioneer keep the technology fee just so long as it charged one.
"We said, `Just go with our form and keep the money.' And they didn't want to go," said Mr. Donald, now the chief executive of Merisant, a Chicago company that makes artificial sweeteners.
When talking failed, Monsanto tried a threat. Former Monsanto executives said they told Pioneer they would withhold new technology from Pioneer if it did not renegotiate.
"We said, `You paid us; you have every right,' " Mr. Donald said. " `But now we have a value capture for the industry.' And we said, `If you want future technology from us, you need to honor it.' "
Monsanto and Pioneer, which is based in Des Moines, declined to discuss specifics of their talks.
In 1997 and 1998, Pioneer executives told Monsanto they would agree to simply charge an "elite" or premium price — in effect agreeing not to compete with Monsanto and its partners on price — in exchange for Monsanto's giving Pioneer access to new varieties of modified seeds and the technology to make others, according to people who have seen documents relating to this.
Mr. Shapiro declined to comment when reached by telephone. Other current executives of Monsanto and Pioneer who participated in the talks were not made available for comment by the companies.
In the mid- to late 1990's, Monsanto sought similar agreements from other rivals, according to former seed executives.
For example, Monsanto asked the seed unit of Novartis, the Swiss maker of drugs and nutrition products, to charge premium prices for its altered soybeans even though Novartis, like Pioneer, had a license to market them independently, according to former executives.
"They came to us; they did pose that question," said Ed Shonsey, the former chief executive of Novartis's crop science unit. "We felt it was inappropriate. We refused."
In 1995, Monsanto asked Mycogen, which is based in San Diego, not to compete with Monsanto or its partners on the price of biotech seeds in exchange for access to some of Monsanto's patented technologies, according to former executives and others who were close to the talks.
Carlton Eibl, former chief executive of Mycogen, said Monsanto also sought to combine its seed technology with Mycogen's to bring his company into Monsanto's pricing system.
"They wanted us to license enough of their technology so they could control pricing under the G.L.A.," he said, referring to Monsanto's grower licensing agreement. "That was a fundamental thing about controlling price that we did not agree with. No matter how you look at it, it was anticompetitive." Mycogen later was acquired by Dow Chemical.
Monsanto denied it sought an agreement on price with either Novartis or Mycogen; it said it was simply engaged in licensing negotiations.
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