Last week the Department of Justice (DOJ) decided to take John Deere to court in an anti-trust lawsuit. (You can read more here.) At this point the outcome of that lawsuit is unclear. Farmers and industry insiders alike were surprised by the challenge, but some analysts not so much.
According to Jim Weisemeyer of Informa Economics, the current road block for the Precision Planting and John Deere Merger is temporary. “There’s not one big leader in this area,” he explained to AgriTalk radio show host Mike Adams. “So some people might say they should have approved it, but I don’t think they want two biggies coming in here at the onset of a fledgling industry.”
Precision planting technology is a relatively new industry with very few players. Roger McEowen, an anti-trust law expert with CliftonLarsonAllen, also joined Mike Adams on AgriTalk. He said it was a close call on whether DOJ would do something about this merger, but fortunately the issues are likely to be specific to precision planting.
“It may be specific enough…that it really may not set a precedent (affecting) other types of mergers in the ag industry right now,” he said. “Precision Planting is a key player in the high speed precision planting field, and they are john Deere’s only competitor in that space.” (Note: Deere has reportedly called Precision Planting a tough competitor. Read Deere’s actual claims here.)
McEowen thinks the DOJ is concerned that a John-Deere-dominated marketplace would mean less innovation and a technology slowdown that farmers would have to pay for.
“DOJ is looking at a marketplace that is pretty heavily controlled by a couple of companies,” he said. “So I’m not that surprised that when they see those two controlling players combined they want to take a look at it. I’m not convinced it poses the problem that DOJ thinks it does, but I’m sure Deere is going to push back on this.”