Justice opposes Monsanto, Deere deal
Obama administration says proposed agri merger hurts farmers
The Obama administration on Wednesday filed an antitrust lawsuit seeking to block a low-profile deal between two high-profile agricultural industry suppliers, Deere and Monsanto, describing the decision as necessary to protect farmers.
The Justice Department sought to block Deere’s acquisition of Monsanto’s Precision Planting, initially revealed in November. The deal threatened to give Deere a stranglehold on the market for high-speed precision-planting devices, the government charged. Together, Deere and Monsanto sell 86% of all equipment in the precision-planting sector, the government said.
The Justice Department’s action comes amid a flurry of mergers and acquisitions in the agricultural industry, potentially signaling greater antitrust scrutiny to come, even as the sector sags amid declining crop prices.
“If this deal were allowed to proceed, Deere would dominate the market for high-speed precision-planting systems and be able to raise prices and slow innovation at the expense of American farmers who rely on these systems,” Renata Hesse, acting assistant attorney general of Justice’s antitrust division, said in a statement.
Though Precision Planting’s 2015 sales were about $100 million, antitrust officials said the tech will “become the industry standard in the coming years,” replacing conventional planters.
Deere and Monsanto pledged to fight the lawsuit, saying the deal will increase the availability of the technology and that competition is “strong and growing.”
“DOJ’s allegations about the competitive impacts of the transaction are misguided and the companies intend to defend the transaction vigorously against those allegations,” the companies said in a statement. “The proposed acquisition benefits farmers by accelerating the development and delivery of new precision equipment solutions that help farmers increase yield and productivity.”
Deere stock closed down 1.3% Wednesday to $84.55, and Monsanto fell 0.9% to $106.52.