Dept. of Justice Files Suit to Block Deere & Co. Purchase of Monsanto Unit

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U.S. Dept. of Justice (DOJ) antitrust officials have filed suit to block the purchase by Deere & Co. of Monsanto’s Precision Planting LLC equipment business, charging the purchase would eliminate competition and raise costs for farmers.

The transaction would combine the only two major U.S. providers of high-speed precision planting systems used by farmers, DOJ said, giving the company control of close to 90 percent of the U.S. market.

“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,” said Renata Hesse, the head of the antitrust division.

DOJ further noted the technology will “become the industry standard in the coming years,” replacing conventional planters.

Deere and The Climate Corporation, a subsidiary of Monsanto Company, announced in November they had signed a definitive agreement for Deere to acquire the Precision Planting LLC equipment business, and the companies cooperated fully with DOJ’s antitrust review.

In the wake of the suit, the companies said they would fight to keep the deal moving forward. “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 firm’s said in a release. “Deere has long been focused on helping American farmers become more efficient and productive so that they can remain globally competitive. The proposed acquisition benefits farmers by accelerating the development and delivery of new precision equipment solutions that help farmers increase yield and productivity.”

Monsanto acquired Precision Planting for $210 million in 2012 as part of a broader push into data-powered farming services, hastened a year later when the seed giant paid $930 million for the weather modeling startup Climate Corp.

Comments: This is one in a string of U.S. mergers, both in the agriculture and other industries, that the Obama administration is either still reviewing or seeking to block on the grounds that it will lessen competition and increase costs to users of the products/services provided by the companies in question. DOJ already has filed legal challenges to Anthem Inc.’s acquisition of Cigna Corp. and Aetna Inc.’s deal to combine with Humana Inc. Plus, DOJ continues to review the proposed merger of Dow Chemical and DuPont.

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.