Moss Examines Implications of High Concentration in Agricultural Biotechnology in CPI’s Antitrust Chronicle

AAI’s Diana Moss contributed to CPI’s Winter 2020 (Vol. 1, No. 1) on competition in agriculture. Her article, Concentration in Agricultural Biotechnology: Next Generation Competition Issues, examines the implications of the most recent wave of consolidation among large incumbent firms in the agricultural biotechnology sector. Three major mergers – Bayer-Monsanto, Dow-DuPont, and ChemChina-Syngenta – have reduced the number of rivals from six players in the last few years to a tight oligopoly of three mega-firms, with BASF trailing in last place. The mergers, and the fundamental restructuring of U.S. agricultural biotechnology they have wrought, raise seminal issues for competition in the sector and adverse effects on growers and consumers, who potentially face even higher input and food prices, lower quality, less innovation, and higher risks to food security.

Similar to healthcare and communications, consolidation in the agricultural biotechnology sector has largely flown “under the radar” as enforcers, Congress, and the media focus on the high-profile digital technology markets. This disproportionate focus is unfortunate, as the agricultural biotechnology sector is poised to launch yet another phase of consolidation. These are acquisitions of smaller, innovative digital farming rivals that are also likely to fly under the radar as enforcers struggle to evaluate and challenge similar types of deals in the digital technology sector.

This article focuses on key competition issues that flow from sweeping consolidation that has produced the “Big 3.” It begins with a brief review of the startling pace of consolidation in the sector and high levels of concentration in the markets that comprise it. It then moves on to raise key questions about the effects of consolidation and high concentration on innovation. This is followed by the implications of the shift in the competition paradigm from rivalry at individual levels of genetic traits (“traits”), genetically modified (“GM”) crop seed, and crop protection (i.e. chemicals), to highly integrated, exclusive proprietary cropping systems that are now fueled by acquisitions of digital farming assets.

The article appears in CPI’s Antitrust Chronicle, Winter 2020 (Vol. 1, No. 1) issue.