Case 3:21-cv-00122-MAB Document 1 Filed 02/02/21 Page 1 of 60 Page ID #1
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`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF ILLINOIS
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`Case No. 3:21-cv-122
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`CLASS ACTION COMPLAINT
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`JURY TRIAL DEMANDED
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`CHARLES LEX,
`
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`Plaintiff,
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`
`v.
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`BAYER CROPSCIENCE LP; BAYER
`CROPSCIENCE, INC.; CORTEVA INC.;
`CARGILL INCORPORATED; BASF
`CORPORATION; SYNGENTA
`CORPORATION; WINFIELD SOLUTIONS,
`LLC; UNIVAR SOLUTIONS, INC.;
`FEDERATED CO-OPERATIVES LTD.;
`CHS INC.; NUTRIEN AG SOLUTIONS
`INC.; GROWMARK INC.; SIMPLOT AB
`RETAIL SUB, INC.; AND TENKOZ INC.,
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`
`Defendants.
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`556284.5
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`Case 3:21-cv-00122-MAB Document 1 Filed 02/02/21 Page 2 of 60 Page ID #2
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`TABLE OF CONTENTS
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`I.
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`II.
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`NATURE OF THE ACTION ........................................................................................... 1
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`JURISDICTION AND VENUE ....................................................................................... 3
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`III.
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`PARTIES ........................................................................................................................... 4
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`A.
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`B.
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`C.
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`D.
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`Plaintiff ................................................................................................................... 4
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`The Manufacturer Defendants ................................................................................ 5
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`The Wholesaler Defendants .................................................................................... 6
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`The Retailer Defendants ......................................................................................... 6
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`IV.
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`V.
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`VI.
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`TRADE AND COMMERCE ........................................................................................... 8
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`THE RELEVANT MARKETS ........................................................................................ 8
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`FACTUAL ALLEGATIONS ........................................................................................... 8
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`A.
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`B.
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`C.
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`D.
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`E.
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`Industry Background ............................................................................................... 8
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`The Crop Inputs Market is Characterized by a Lack of Pricing and Industry
`Transparency, Which Defendants Capitalize Upon in Their Business Practices. .. 9
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`The Rise of Electronic Crop Inputs Sales Platforms Threatened Defendants’
`Operations By Increasing Transparency and Access to Crop Inputs. ................... 10
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`Faced with the Threat of Electronic Crops Inputs Sales Platforms, Defendants
`Conspired With One Another to Restrict the Electronic Platforms’ Ability to
`Successfully Compete in the Crop Inputs Market. ............................................... 11
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`The Structure and Characteristics of the Crop Inputs Market Render the
`Conspiracy Economically Plausible. .................................................................... 18
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`VII. ANTITRUST IMPACT .................................................................................................. 21
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`VIII. ANTITRUST INJURY ................................................................................................... 21
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`IX. CLASS ACTION ALLEGATIONS .............................................................................. 22
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`X.
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`XI.
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`STANDING TO SEEK RELIEF ................................................................................... 24
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`EQUITABLE TOLLING AND FRAUDULENT CONCEALMENT ........................ 25
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`XII. CAUSES OF ACTION ................................................................................................... 26
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`XIII. PRAYER FOR RELIEF................................................................................................. 55
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`XIV. DEMAND FOR JURY TRIAL ...................................................................................... 57
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`Case 3:21-cv-00122-MAB Document 1 Filed 02/02/21 Page 4 of 60 Page ID #4
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`Plaintiff Charles Lex brings this action on behalf of himself and on behalf of the classes
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`defined herein consisting of persons or entities in the United States, including its territories, that,
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`at least as early as January 1, 2014 and continuing through the present (the “Class Period”),
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`purchased from a Defendant a Crop Input as defined herein. Plaintiff brings this action for treble
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`damages under the antitrust laws of the United States against Defendants, and demands a trial by
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`jury.
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`I. NATURE OF THE ACTION
`The market for “Crop Inputs”—seeds and crop protection chemicals such as
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`1.
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`fungicides, herbicides, and insecticides—used by American farmers is one of the largest markets
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`in the world with annual sales in excess of $65 billion.
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`2.
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`This market is dominated by: (1) four major manufacturers, Defendants Bayer
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`CropScience Incorporated (“Bayer”), Corteva Incorporated (“Corteva”), Syngenta Corporation
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`(“Syngenta”), and BASF Corporation (“BASF”), (collectively, the “Manufacturer Defendants”);
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`(2) three large wholesalers, Defendants Cargill Incorporated (“Cargill”), Winfield Solutions, LLC
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`(“Winfield”), Univar Solutions, Incorporated (“Univar”) (collectively
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`the “Wholesaler
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`Defendants”), that control the distribution of Crop Inputs to farmers; and (3) retailers, including
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`Defendants CHS Incorporated (“CHS”), Nutrien Ag Solutions Incorporated (“Nutrien”),
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`GROWMARK, Incorporated (“Growmark”), Simplot AB Retail Sub, Incorporated (“Simplot”),
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`Tenkoz
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`Incorporated
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`(“Tenkoz”), and Federated Co-operatives Limited
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`(“Federated”)
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`(collectively the “Retailer Defendants”).1
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`1 The Manufacturer Defendants, the Wholesaler Defendants, and the Retailer Defendants will be
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`referred to in this Complaint collectively as the “Defendants.”
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`3.
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`Historically and continuing to the present, the existing distribution and sale process
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`for Crop Inputs maintains supra-competitive prices in part by denying farmers accurate product
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`information, including pricing information, which would allow them to make better-informed
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`purchasing decisions. As a result, the average price American farmers pay for Crop Inputs is
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`increasing at a rate that dramatically outpaces yields.
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`4.
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`For example, over the last 20 years, the price of one type of Crop Input, seed corn,
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`rose 300%, while corn yields increased only 33% to 35%. In 1989, U.S. farms spent $15.6 billion
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`overall on chemicals, fertilizer, and seeds. This number rose to $59 billion in 2019, outpacing
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`inflation by 60%. Crop Inputs have consequently composed a larger share of farm budgets. In
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`1989, Crop Inputs composed 12.6% of farm expenditures; by 2019, Crop Inputs composed 16.4%
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`of farmer spending. These increases are proving increasingly devastating to farmers, who are now
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`the least profitable level of the American food supply chain and are drowning in hundreds of
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`billions of dollars of operating debt that is forcing them into bankruptcy at a record pace.
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`5.
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` Recognizing these inefficiencies, several electronic Crop Inputs sales platforms
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`launched in at least the past decade. These electronic platforms aimed to provide a cheaper, more
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`transparent way for farmers to buy Crop Inputs, circumventing the existing opaque, convoluted
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`distribution system. For example, Farmers Business Network (“FBN”), a leading electronic sales
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`platform and Silicon Valley startup, was extremely popular with farmers upon launch, and has
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`successfully raised millions of dollars from leading venture capital firms to build out capacity to
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`meet that demand.
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`6.
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`These new platforms threatened the Defendants’ dominant market position and
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`control over Crop Inputs pricing. As a result, rather than compete fairly with these new electronic
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`platforms, Defendants conspired to block the platforms’ access to Crop Inputs by engaging in a
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`group boycott. For instance, the Manufacturer, Wholesaler, and Retailer Defendants repeatedly
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`blocked FBN’s access to Crop Inputs by agreeing among themselves not to sell products to FBN,
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`even though doing so would have opened a significant new sales channel for any individual
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`manufacturer, wholesaler, or retailer acting independently and would have been in the Defendants’
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`unilateral best economic interest.
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`7.
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`When FBN attempted to circumvent this unlawful boycott by purchasing an
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`established retailer with existing supply agreements, the Defendants canceled those contracts,
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`starving FBN’s platform of necessary inputs by ensuring that FBN could not acquire the Crop
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`Inputs it needed to operate.
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`8.
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`Given the structure of the Crop Inputs industry with the necessary relationships
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`between manufacturers, wholesalers, and retailers, an effective boycott of electronic platforms
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`would not have been feasible absent actual coordination and cooperation among Defendants.
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`Absent an agreement among themselves, Defendants’ actions were against their independent
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`economic self-interests.
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`9.
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`As a result of Defendants’ misconduct, farmers remain trapped in an inefficient,
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`opaque Crop Inputs market and have paid more for Crop Inputs than they would have but for
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`Defendants’ wrongful conduct. Plaintiff and the Classes bring this antitrust suit to redress that
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`wrongful conduct.
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`II.
`Plaintiff brings this action under Section 16 of the Clayton Act, 15 U.S.C. § 26, to
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`JURISDICTION AND VENUE
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`10.
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`secure injunctive relief against Defendants for violating Section 1 of the Sherman Act, 15 U.S.C.
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`§ 1, and to recover actual and compensatory damages, treble damages, interest, costs, and
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`attorneys’ fees for the injury caused by Defendants’ wrongful conduct. Plaintiff also brings state
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`law class claims on behalf of the Classes to recover actual and/or compensatory damages, double
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`and treble damages as permitted, pre- and post- judgment interest, costs, and attorneys’ fees for
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`the injury caused by Defendants’ conduct.
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`11.
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`This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§
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`1331 and 1337(a) and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15(a) and 26. This Court
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`also has jurisdiction under 28 U.S.C. § 1332 because the amount in controversy for the Class
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`exceeds $5,000,000 and members of the Class are citizens of a different state than Defendants.
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`12.
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`Venue is proper in this District pursuant to Sections 4, 12, and 16 of the Clayton
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`Act, 15 U.S.C. § 15(a), and 28 U.S.C. § 1391(b), (c), and (d). One or more Defendants resided,
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`transacted business, were found, or had agents in this District, and a substantial portion of the
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`affected interstate trade and commerce described in this Complaint was carried out in this District.
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`13.
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`This Court also has personal jurisdiction over each Defendant because, inter alia,
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`each Defendant: (a) transacted business throughout the United States, including in this District; (b)
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`manufactured, sold, shipped, and/or delivered substantial quantities of Crop Inputs throughout the
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`United States, including in this District; (c) had substantial contacts with the United States,
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`including in this District; and/or (d) engaged in an antitrust conspiracy that was directed at and had
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`a direct, foreseeable, and intended effect of causing injury to the business or property of persons
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`residing in, located in, or doing business throughout the United States, including in this District.
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`14.
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`The activities of the Defendants and all co-conspirators, as described herein, were
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`within the flow of, were intended to, and did have direct, substantial, and reasonably foreseeable
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`effects on, the foreign and interstate commerce of the United States.
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`III. PARTIES
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`Plaintiff
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`Plaintiff Charles Lex is a resident of Iowa and citizen of the United States. During
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`A.
`15.
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`the Class Period and while residing in Iowa, Plaintiff purchased Crop Inputs for his own use in his
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`farming operation and not for resale that were sold by one or more Defendants or their co-
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`conspirators. Plaintiff suffered injury as a result of Defendants’ conduct alleged herein.
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`B.
`16.
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`The Manufacturer Defendants
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`Bayer AG is a multinational pharmaceutical, chemical, and agriculture company. It
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`organizes itself into four divisions, each with its own management and corporate organization.
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`Legal entities within each division work together, follow a common strategy, and report up to the
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`same level of management.
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`17.
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`Defendant Bayer CropScience Incorporated is a wholly-owned subsidiary of Bayer
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`AG headquartered in St. Louis, Missouri and incorporated in New York that develops,
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`manufactures, and sells Crop Inputs in the United States.
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`18.
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`Defendant Bayer CropScience LP is a wholly-owned subsidiary of Bayer AG
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`headquartered in Research Triangle Park, North Carolina, and is a crop science company that sells
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`Crop Inputs in the United States.
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`19.
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`Bayer CropScience Incorporated and Bayer CropScience LP both operate as part
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`of the Bayer Group’s Crop Science division.
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`20.
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`Defendant Corteva Incorporated is a Delaware corporation headquartered in
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`Wilmington, Delaware, that develops, manufactures, and sells Crop Inputs in the United States.
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`21.
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`Defendant BASF Corporation is a Delaware corporation headquartered in Florham
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`Park, New Jersey, and is the principal U.S.-based operating entity and largest subsidiary of BASF
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`SE, a multinational pharmaceutical, seed, and chemical company. BASF develops, manufactures,
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`and sells Crop Inputs in the United States.
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`22.
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`Defendant Syngenta Corporation is a Delaware corporation and is the main U.S.-
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`based operating subsidiary of Syngenta AG. It is headquartered in Wilmington, Delaware.
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`Syngenta develops, manufactures, and sells Crop Inputs in the United States.
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`C.
`23.
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`The Wholesaler Defendants
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`Defendant Cargill, Incorporated is a Delaware corporation headquartered in
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`Minnetonka, Minnesota. Cargill owns and operates a wholesaler AgResource Division, which
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`distributes Crop Inputs to Cargill’s retail network and to retailers. Cargill’s AgResource Division
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`maintains contracts with each of Bayer, Corteva, BASF, and Syngenta entitling it to purchase and
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`distribute branded Crop Inputs and entitling it to special rebates.
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`24.
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`Defendant Winfield Solutions, LLC is a Delaware corporation headquartered in
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`Arden Hills, Minnesota. Winfield is a Crop Inputs wholesaler. It maintains contracts with each of
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`Bayer, Corteva, BASF, and Syngenta authorizing it to purchase and distribute branded Crop Inputs
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`and entitling it to special rebates. Winfield is also a major Crop Inputs retailer that operates as a
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`cooperative owned by its members, which are 650 Crop Inputs retail businesses operating 2,800
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`retail locations throughout the United States and parts of Canada.
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`25.
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`Defendant Univar Solutions, Incorporated is a Crop Inputs wholesaler. Univar
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`maintains contracts with each of Bayer, Corteva, BASF, and Syngenta authorizing it to purchase
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`and distribute branded Crop Inputs and entitling it to special rebates. Univar is a domestic
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`corporation headquartered in Illinois and incorporated in Delaware.
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`D.
`26.
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`The Retailer Defendants
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`Defendant CHS Incorporated is one of the largest Crop Inputs wholesalers in the
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`United States. Like many large wholesalers, it also operates retail networks bearing the CHS brand
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`around the country that sell Crop Inputs from brick and mortar stores. CHS is incorporated and
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`headquartered in Inver Grove Heights, Minnesota.
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`27.
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`CHS and the retail networks it operates maintain contracts with each of Bayer,
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`Corteva, BASF, and Syngenta authorizing it to purchase and distribute Crop Inputs and entitling
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`it to special rebates.
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`28.
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`Defendant Nutrien Ag Solutions, Inc. is both a Crop Inputs wholesaler and the
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`largest Crop Inputs retailer in the United States. It sells Crop Inputs to farmers throughout the
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`country and maintains contracts with each of Bayer, Corteva, BASF, and Syngenta authorizing it
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`to purchase and distribute Crop Inputs and entitling it to special rebates. Nutrien is incorporated in
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`Delaware and has its principal place of business in Colorado.
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`29.
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`Defendant GROWMARK, Incorporated, d/b/a Farm Supply or FS, is a large Crop
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`Inputs retailer headquartered in Illinois, with brick and mortar locations throughout the
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`Midwestern United States. Growmark is incorporated in Delaware. Growmark maintains contracts
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`with each of Bayer, Corteva, BASF, and Syngenta authorizing it to purchase and distribute Crop
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`Inputs, and entitling it to special rebates.
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`30.
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`Defendant Tenkoz Inc. is one of the largest Crop Inputs retailers in the United
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`States. Tenkoz purchases and sells 25% of all crop protection chemicals sold in the United States
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`annually through 550 retail locations and 70 wholesale locations around the country. Tenkoz is
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`incorporated and headquartered in Georgia. Tenkoz maintains contracts with each of Bayer,
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`Corteva, BASF, and Syngenta authorizing it to purchase and distribute Crop Inputs and entitling
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`it to special rebates.
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`31.
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`Defendant Simplot AB Retail Sub, Incorporated, f/k/a Pinnacle Agriculture
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`Distribution, Incorporated, is a large Crop Inputs wholesaler and retailer that operates 135 retail
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`locations across 27 states. Simplot is headquartered and incorporated in Mississippi. Simplot
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`maintains contracts with each of Bayer, Corteva, BASF, and Syngenta authorizing it to purchase
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`and distribute Crop Inputs and entitling it to special rebates.
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`32.
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`Defendant Federated Co-operatives Ltd. is a large Crop Inputs retailer. It maintains
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`contracts with each of Bayer, Corteva, BASF, and Syngenta authorizing it to purchase and
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`distribute Crop Inputs and entitling it to special rebates. Federated is under investigation by the
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`Canadian Competition Bureau for engaging in coordinated anticompetitive practices designed to
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`exclude competition in the Crop Inputs market.
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`IV. TRADE AND COMMERCE
`The Defendants’ business activities that are subject to this Complaint were within
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`33.
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`the flow of and substantially affected interstate trade and commerce.
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`34.
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`During the Class Period, the Defendants’ conduct and their co-conspirators’
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`conduct occurred in, affected, and foreseeably restrained interstate commerce of the United States.
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`V. THE RELEVANT MARKETS
`This action involves the markets for Crop Inputs, including the manufacture of Crop
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`35.
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`Inputs, the wholesale market for Crop Inputs, and the retail sales market for Crop Inputs.
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`36.
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`The relevant geographic market is the United States.
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`VI. FACTUAL ALLEGATIONS
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`A.
`37.
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`Industry Background
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`Farmers in the United States are facing an existential crisis, with operating expenses
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`skyrocketing while yields remain stagnant. At their peak prices in 2014, input costs jumped 67.5%
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`for planting soybeans, 72.1% for planting corn, and 56.3% for planting cotton, compared to the
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`respective input costs in 1995. On the other hand, yields for soybeans and corn—the two most
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`planted field crops in the United States—increased by only 18.9% and 29.7%, respectively,
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`between 1995 and 2011.
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`38.
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`In a 2018 survey, 80% of farmers reported that their costs had only continued to
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`increase. As a result, farmers cannot pay their outstanding operating debts—estimated at well over
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`$400 billion in 2019—and the rate of farm bankruptcies has accelerated, with declared farm
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`bankruptcies increasing by 24% from 2018 to 2019, the biggest yearly increase since the Great
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`Recession.
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`39.
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`This steady cost increase is not attributable to escalating research and development
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`expenditures, which have decreased considerably over the past several years. Rather, it is the result
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`of inflated and unjustifiable increases in the prices farmers pay for Crop Inputs—the seeds and
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`chemicals such as fertilizer, insecticide, and herbicide used to produce a crop—and the supra-
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`competitive prices paid by farmers as a result of Defendants’ wrongful conduct, including their
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`group boycott of electronic distribution platforms as alleged in this Complaint.
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`B.
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`The Crop Inputs Market is Characterized by a Lack of Pricing and Industry
`Transparency, Which Defendants Capitalize Upon in Their Business
`Practices.
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`40.
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`These inflated prices persist—and wreak financial havoc on America’s farmers—
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`by Defendants’ design. The Crop Inputs market is structured, from top to bottom, to maximize
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`opacity and deny farmers access to the objective pricing data and product information they need
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`to make informed decisions about the Crop Inputs they buy. Farmers, through no fault of their
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`own, are unwittingly paying more for Crop Inputs than they would in a truly competitive market.
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`Farmers lack the objective information and data needed to gauge whether their investments are
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`worthwhile, as well as any ability to purchase Crop Inputs without paying unnecessary overhead
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`to brick-and-mortar retailers and other costs.
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`41.
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`This opacity begins at the very top of the Crop Inputs market, where the
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`Manufacturer Defendants who develop and produce between 75% and 90% of the most popular
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`Crop Inputs closely guard their product prices.
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`42.
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`Then, to maintain that secrecy, Manufacturer Defendants allow only wholesalers,
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`including the Wholesaler Defendants, retailers the manufacturers own or operate, and retailers
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`such as the Retailer Defendants that are licensed “authorized retailers,” to sell the Manufacturer
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`Defendants’ Crop Inputs.
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`43.
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`The Manufacturer Defendants’ contracts granting “authorized retailer” licenses
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`contain strict confidentiality provisions that require authorized retailers to keep confidential the
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`manufacturers’ prices, as well as any incentives, rebates, and commissions offered by the
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`manufacturers to their authorized retailers.
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`44. Manufacturer Defendants also use a tactic known as “seed relabeling” to capitalize
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`on farmers’ lack of objective performance data. Seed relabeling is the practice of taking seeds that
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`have been on the market under a given brand name for some time and repackaging the seeds under
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`a new brand name so that they can be sold at a new, higher price, even though the seeds are the
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`same.
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`45.
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`Pricing is no more transparent at the retail level. To the contrary, wholesalers’
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`contracts with authorized retailers also contain strict confidentiality provisions. Retailers cannot
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`disclose to customers the price paid to the wholesaler for their Crop Inputs or the price at which
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`retailers sell those Crop Inputs to other farmers. To further muddy the market waters, retailers sell
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`Crop Inputs and related services (e.g., spraying or applying chemicals) in bundles, making it
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`difficult—if not impossible—for farmers to discern the price they are charged for any individual
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`Crop Input or service.
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`C.
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`The Rise of Electronic Crop Inputs Sales Platforms Threatened Defendants’
`Operations By Increasing Transparency and Access to Crop Inputs.
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`46.
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`Recognizing the inefficiency of such an opaque Crop Inputs market, electronic
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`Crop Inputs sales platforms began emerging around in at least the past decade with the goal of
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`modernizing the market by, among other things, providing farmers with transparent pricing and
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`access to Crop Inputs directly from the Manufacturer Defendants, avoiding the opaque distribution
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`system controlled by the Wholesaler and Retailer Defendants.
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`47.
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`At first, those efforts showed extraordinary promise, as farmers gravitated en masse
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`toward these electronic platforms in search of better, fairer prices for Crop Inputs. For example,
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`more than 12,000 farmers signed up for FBN’s service that provides objective performance data
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`on Crop Inputs, and 6,000 farmers signed up for FBN’s electronic platform that was designed to
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`sell Crop Inputs online. FBN overall has over 21,000 members, and most recently raised $250
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`million in Series F funding to continue its efforts “to improve the profitability of farming families
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`. . . for generations to come.”
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`48.
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`The success of electronic platforms drew negative attention from the Wholesaler
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`and Retailer Defendants, which recognized these new entrants threatened their traditional role in
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`the Crop Inputs market, and more importantly, threatened their profit margins. FBN as an example
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`particularly stands out because of its popularity and potential to significantly disrupt traditional
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`Crop Inputs supply and pricing.
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`49.
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`As a report published by CoBank, a cooperative partly owned by Crop Inputs
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`retailers and a major lender to grain cooperatives, explained, “Despite relatively low sales, e-
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`commerce companies pose a threat to brick-and-mortar ag retailers in two ways. First, any
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`new competitor will erode sales and margins to some degree and second, e-commerce sites
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`increase transparency for product prices.” That price transparency would allow farmers to
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`negotiate more effectively with Crop Inputs retailers, thus eating into the retailers’ margins.
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`D.
`
`Faced with the Threat of Electronic Crops Inputs Sales Platforms, Defendants
`Conspired With One Another to Restrict the Electronic Platforms’ Ability to
`Successfully Compete in the Crop Inputs Market.
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`50.
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`Upon learning about FBN’s 2016 entry into the U.S. market as an electronic Crop
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`Inputs sales platform, CHS officials distributed a letter to farmers attempting to discourage them
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`from using FBN, falsely claiming that although an electronic platform like FBN would be able to
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`offer the same products at cheaper prices, “FBN just does it with little overhead and without
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`returning any profits to you the farmer, while lining the pockets of investors and big data
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`companies like Google.”
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`51.
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`Additionally, in 2016, Defendant Bayer secretly formed an internal task force
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`specifically to study the long-term competitive impact of FBN’s electronic platform.
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`52.
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`On February 2, 2016, CropLife magazine, a trade publication published by
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`CropLife America (a trade association comprising of the major Crop Inputs manufacturers,
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`wholesalers, and retailers), echoed CoBank’s sentiments, and wrote repeatedly about the danger
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`electronic platforms posed to Crop Inputs retailers’ business model. CropLife stated it was
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`“concerned that the retailer could be disintermediated—a fancier and less draconian way of saying
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`[electronic platforms would] ‘cut out the middle man’—allowing growers to find product
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`conveniently and at a lower market price,” and decried “the devil known as ‘price
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`transparency,’” commenting that “[g]rowers were not really as interested in buying and selling and
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`storing product as they were in printing price lists off the Internet and waving them in their
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`retailer’s faces. Already low margins were about to race to the bottom.”
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`53.
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`In the same February 2, 2016 article, CropLife magazine criticized another
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`electronic platform in its article, XSAg.com (currently known as FarmTrade, LLC or
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`FarmTrade.com), one of the original electronic platform trailblazers that had launched to offer “a
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`virtual playing field” for the purchase and sale of certain Crop Inputs electronically, essentially
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`operating as a trading platform. CropLife described XSAg’s entry as a “punch [that] came out of
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`the shadows and landed a nasty body blow” to threaten retailers, but “[c]rop protection
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`Case 3:21-cv-00122-MAB Document 1 Filed 02/02/21 Page 16 of 60 Page ID #16
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`manufacturers and the distribution channel eventually figured out how to do battle with the pricing
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`revelations XSAg brought to the market, but it was unnerving and unhappy time.”
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`54.
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`In late fall 2017, CropLife’s PACE Advisory Council—a committee composed of
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`the “heads of major ag retailers, market suppliers, equipment makers, and other agricultural
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`analysts”—explicitly called out the threat posed by electronic platforms to retailers and
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`wholesalers at its annual meeting. CropLife’s coverage of the event reported that “three letters . . .
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`continually cropped up no matter what the topic of conversation happened to be – FBN (Farmers
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`Business Network). To say that all things related to FBN and its business practices dominated
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`much of the day-long event would be a gross understatement. Several members of the PACE
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`Council described how FBN had negatively affected their businesses during 2017 by cutting
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`into their already slim margins on various products.” One PACE Council member observed,
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`“I think it would be crazy, stupid to ignore [FBN]. Even if they end up going away, the business
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`model they’ve introduced to agriculture will probably be tried by someone else.”
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`55.
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`In February 2018, CropLife reported on a local “huge price war in chemicals” in
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`Iowa in 2017 as a result of FBN competing in the market. A retailer competing with FBN urged
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`that “‘ag retailers need to get proactive’ in dealing with the threat of disintermediation.” Another
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`retailer noted that “as we get more competitive with the FBNs of the world, we’ll obviously have
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`to cut back on services and support (at times). But what concerns me is when . . . the legal
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`implications of that is you are a big business now and the regulatory burden becomes more
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`significant.”
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`56.
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`Defendants had a strong motive to conspire to preserve their opaque market
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`structure. If electronic platforms publicly published price lists for specific Crop Inputs, then the
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`Manufacturer, Wholesaler, and Retailer Defendants could no longer keep prices confidential and
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`Case 3:21-cv-00122-MAB Document 1 Filed 02/02/21 Page 17 of 60 Page ID #17
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`charge inflated prices for identical Crop Inputs and/or maintain price opacity through seed
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`relabeling and bundling.
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`57.
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`The Retailer Defendants and the Wholesaler Defendants knew that to retain their
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`market positions and maintain their profit margins, they had to exclude electronic platforms from
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`the market, so they conspired to cut off the platforms’ product supply. Because the Manufacturer
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`Defendants rely on the Retailer and Wholesaler Defendants to recommend and sell the
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`Manufacturer Defendants’ products to farmers, the Retailer and Wholesaler Defendants had to
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`convince the Manufacturer Defendants to agree not to supply FBN and other platforms in order to
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`make the boycott effective.
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`58.
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`Subsequently, in 2016 through at least 2017 after FBN entered the market as an
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`electronic Crop Inputs sales platform, the Manufacturer Defendants complied with the Retailer
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`and Wholesaler Defendants’ demand and initiated a joint boycott of electronic platforms, including
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`of FBN, the target of CropLife’s report. As a result, when FBN reached out to the Manufacturer
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`and Wholesaler Defendants for Crop Inputs, they all refused to supply FBN, offering only
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`pretextual excuses for their refusal.
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`59.
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`For example, in fall 2018, after Syngenta’s Head of Crop Protection Sales in the
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`U.S. learned that a small number of branded Crop Inputs had been sold on electronic platforms in
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`violation of Defendants’ boycott, he falsely claimed that electronic platforms would deliver
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`counterfeit products. He further claimed that “[w]hen online entities acquire products from sources
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`other than authorized dealers or contracted distributors, you’d better question and be concerned
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`about the quality.”
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`60.
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`The Ma