OLIGOPOLY ON THE SEEDS MARKET OR WHAT MAKES COMPANIES INVINCIBLE FOR COMPETITORS

The key points in a discussion of BRICS Working Group on global food value chains and its deep transformation

BRICS Working Group on global food value chains was formed in 2016. Representatives of BRICS competition authorities have discussed many issues related to competition development on a socially essential food products market.

One of the important issues, which was in the focus of several sessions of the Working Group, concerns the modern structure of the food products market and its deep transformation that increased market concentration considerably. The discussions results were used by BRICS competition authorities, including FAS, to analyze global mergers, particularly, “Bayer/Monsanto” merger. FAS summarizes the key points of the Working Group discussion.

The food industry is experiencing an important shift in competitive development trends. The balance of competition law and the norms of intellectual property protection are advancing to the forefront to ensure fair and non-discriminatory access to the achievements in selection and new technologies. Competition authorities continue discussing the social-and-economic consequences of mergers and unfair conduct of participants of global food chains.

Violating the rules of competition on the food markets is crucial not only for performance of the economies but also for national security of any state. It is necessary to remember that Brazil, Russia, India, China and South Africa account for around half of the Earth’s population, so studies of the state of competition on the food markets in BRICS economies are of considerable practical importance.

The Working Group on global food value chains is actively discussing aspects of collaboration between BRICS antimonopoly bodies in considering cross-border mergers on food products markets and violations of the competition law.

Recently, the seeds market has been experiencing serious transformations due to a technological growth and market consolidation. It became an oligopoly in the 1980s, while three mega-mergers – “Dow/DuPont”, “Bayer/Monsanto” and “Syngenta/ChemChina” – led to formation of corporations with huge innovative and technological potential. BRICS Working Group on global food value chains chains reached a conclusion that apart from traditional approaches to mega-mergers on the seeds market, competition authorities should take into account:

1) The need for an integrated approach to evaluating the market environment (impact of joint ventures, licensing agreements, agreements on cooperation, various patent agreement, etc.);

2) Impact of each stage of global food value chains on subsequent stages (production, treatment, growing and multiplication, retail, etc.);

3) “Informal economy” – seeds remaining at farms for further cultivation;

4) The need to develop new approaches to market definition, and set thresholds enabling adequate assessment of the influence on competition; the significance of possessing patents and possibility to operate big data.

Today’s model of market regulation puts national state systems in the conditions when efficient mechanisms for control over exterritorial risks are absent. Thus, competition authorities must consider the food sector through the prism of global value chain performance rather than a set of separate markets.

Note:

On 16 - 19 September 2019, Moscow hosts the VI BRICS International Competition Conference – “10 years of successful cooperation: results and prospects”. For the event announcement, see https://brics-icc-2019.org/en/.

The “Competition issues in the BRICS food markets” session is scheduled on 17 September 2019 at 09:00-10:30 a.m.