UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
`22-cv-828
`Case No. [ ____________ ]
`COMPLAINT
`[PUBLIC REDACTED VERSION
`OF DOCUMENT FILED UNDER
`SEAL]
`
`FEDERAL TRADE COMMISSION,
`STATE OF CALIFORNIA,
`STATE OF COLORADO,
`STATE OF ILLINOIS,
`STATE OF INDIANA,
`STATE OF IOWA,
`STATE OF MINNESOTA,
`STATE OF NEBRASKA,
`STATE OF OREGON,
`STATE OF TEXAS,
`and
`STATE OF WISCONSIN,
`Plaintiffs,
`
`v.
`SYNGENTA CROP PROTECTION AG,
`SYNGENTA CORPORATION,
`SYNGENTA CROP PROTECTION, LLC,
`and
`CORTEVA, INC.,
`Defendants.
`
`1
`
`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 1 of 91
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`
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
`22-cv-828
`Case No. [ ____________ ]
`COMPLAINT
`[PUBLIC REDACTED VERSION
`OF DOCUMENT FILED UNDER
`SEAL]
`
`FEDERAL TRADE COMMISSION,
`STATE OF CALIFORNIA,
`STATE OF COLORADO,
`STATE OF ILLINOIS,
`STATE OF INDIANA,
`STATE OF IOWA,
`STATE OF MINNESOTA,
`STATE OF NEBRASKA,
`STATE OF OREGON,
`STATE OF TEXAS,
`and
`STATE OF WISCONSIN,
`Plaintiffs,
`
`v.
`SYNGENTA CROP PROTECTION AG,
`SYNGENTA CORPORATION,
`SYNGENTA CROP PROTECTION, LLC,
`and
`CORTEVA, INC.,
`Defendants.
`
`1
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 1 of 91
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`1.
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`For many years, Defendants Syngenta Crop Protection AG, Syngenta
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`Corporation, and Syngenta Crop Protection, LLC (collectively, “Syngenta”) and Corteva,
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`Inc. (“Corteva”) have unfairly impeded competitors and artificially inflated the prices that
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`U.S. farmers pay for crop-protection products. Defendants do this by deploying a set of
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`so-called “loyalty programs,” which are designed to severely limit the availability of
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`lower-priced generic products. Through this scheme, Defendants have suppressed generic
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`competition and maintained monopolies long after their lawful exclusive rights to
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`particular crop-protection products have expired. These unlawful business practices have
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`cost farmers many millions of dollars a year.
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`2.
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`Plaintiffs Federal Trade Commission and the states of California, Colorado,
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`Illinois, Indiana, Iowa, Minnesota, Nebraska, Oregon, Texas, and Wisconsin, by and
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`through their Attorneys General, petition this Court pursuant to Section 13(b) of the
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`Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b); Section 16 of the
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`Clayton Act, 15 U.S.C. § 26; and applicable state laws to enter permanent injunctions,
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`other equitable relief, and monetary relief against Syngenta and Corteva to undo and
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`prevent their unlawful conduct in or affecting commerce in violation of Section 5(a) of
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`the FTC Act, 15 U.S.C. § 45(a); Section 3 of the Clayton Act, 15 U.S.C. § 14; Sections 1
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`and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2; and state competition and consumer
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`protection laws.
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`I.
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`NATURE OF THE CASE
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`3.
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`Every year, U.S. farmers purchase over ten billion dollars of crop-
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`protection products (also commonly known as agricultural “pesticides”), crucial farm
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`COMPLAINT
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`2
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 2 of 91
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`inputs that improve crop yields and food security for everyone in the United States. And
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`every year, U.S. farmers collectively pay many millions of dollars more than they should
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`for these products because of Defendants’ so-called “loyalty programs,” which function
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`as unlawful exclusionary schemes. Defendants design those programs to exclude and
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`marginalize competitive generic products even after relevant patent and regulatory
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`exclusivity periods expire and thereby to maintain excessive, supracompetitive prices.
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`This law enforcement action seeks to end those “loyalty programs” and restore
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`competition in this vital sector of the economy.
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`4.
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`Congress has enacted a comprehensive regulatory regime for the crop-
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`protection industry that promotes the twin goals of product innovation and price
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`competition. “Basic” manufacturers like Defendants Syngenta and Corteva initially
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`develop, patent, and register the active ingredients within crop-protection products. They
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`may then exploit the commercial potential of their innovations through lawfully obtained
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`exclusive rights for a period of years. After patent and regulatory exclusivity periods
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`expire, generic manufacturers may enter the market with equivalent products containing
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`the same active ingredients and relying upon the same toxicology and environmental
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`impact data. Unimpeded competition from generic products predictably leads to dramatic
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`price reductions. This regulatory structure thus incentivizes innovation while encouraging
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`price and other competition—all of which benefits U.S. farmers and consumers.
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`5.
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`Defendants systematically undermine and frustrate the goals of this system.
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`When exclusivity periods for crop-protection products expire and generic manufacturers
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`3
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 3 of 91
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`threaten to launch lower-priced competing products, Defendants use their loyalty
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`programs to exclude generic manufacturers from the traditional distribution channel,
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`which is a critical link between manufacturers and farmers.
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`6.
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`Under their respective programs, Defendants offer each participating
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`distributor—collectively constituting over
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` of all sales—substantial payments to
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`exclude or minimize generic manufacturers. Defendants promise the distributor a
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`complex set of incentive payments based on its purchases of branded crop-protection
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`products, paid as
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` on one critical
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`condition: the distributor must limit its purchases of comparable generic products to a set
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`percentage share, usually
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` or less, and sometimes as low as
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`. Defendants term this
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`a “rebate” for “loyalty.” In substance, however, these are exclusion payments to
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`distributors. Defendants pay a portion of their elevated profits to distributors in exchange
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`for the distributors excluding Defendants’ generic competitors, resulting in near-
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`exclusivity for Defendants.
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`7.
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`Defendants’ loyalty programs are designed to hinder the entry and
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`expansion of generic maufacturers, resulting in, among other things, higher prices than
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`would have otherwise prevailed and costing farmers many millions of dollars in
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`overcharges. Distributors participate in and comply with Defendants’ loyalty programs
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`because Defendants both offer rewards for participation and
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`. Distributors profit more from accepting Defendants’ exclusion payments than
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`they would from distributing lower-priced generic products in substantial volumes. The
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`4
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 4 of 91
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`loss of these payments can have severe financial consequences for distributors,
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`.
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`8.
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`A small number of large distributors dominate the sale of crop-protection
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`products in the United States.
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`. Each Defendant’s scheme almost entirely forecloses generic
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`competitors from efficient distribution of their products, preventing generic competitors
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`from making significant sales to national distributors that collectively account for
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`approximately
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` or more of U.S. crop-protection product sales.
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`9.
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`Each Defendant expressly designs its program to maintain its ability to
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`price its products above competitive levels while still retaining large market shares.
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`Defendants thus enjoy outsized profits during the “post-patent” period—when prices
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`would otherwise fall substantially.
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`10. Defendants’ loyalty programs enable Defendants to maintain high prices
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`and dominant market positions years after exclusivity for an active ingredient has
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`expired. Defendants’ schemes have forced generic manufacturers to exit markets
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`encumbered by loyalty programs or to decide not to enter due to those programs. Even
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`when they offer competitive products, generic manufacturers are relegated to selling
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`limited volumes, often through undesirable, less efficient channels of distribution.
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`5
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 5 of 91
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`11. Absent Defendants’ unlawful conduct, Defendants would face increased
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`generic competition, which would lead to increased choice and lower prices for American
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`farmers. Farmers would save many millions of dollars each year when paying for
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`
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`essential crop-protection products.
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`II.
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`JURISDICTION
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`12.
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`This Court has subject matter jurisdiction over this action pursuant to 28
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`U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. § 26, as well as supplemental
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`jurisdiction pursuant to 28 U.S.C. § 1367(a). This Court’s exercise of supplemental
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`jurisdiction over Plaintiffs’ state law claims will avoid unnecessary duplication and
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`multiplicity of actions and will promote the interests of judicial economy, convenience,
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`and fairness.
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`13.
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`This Court has personal jurisdiction over each Defendant because each has
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`the requisite constitutional contacts with the United States of America pursuant to 15
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`U.S.C. § 53(b). This Court also has personal jurisdiction over each Defendant because
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`each is engaged in substantial activity in North Carolina, pursuant to N.C. Gen. Stat. §1-
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`75.4.
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`14. Defendants’ general business practices and the unfair methods of
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`competition alleged herein are activities in or affecting “commerce” within the meaning
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`of Section 4 of the FTC Act, 15 U.S.C. § 44, and Section 1 of the Clayton Act, 15 U.S.C.
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`§ 12.
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`15. Defendants are, and at all times relevant herein have been, corporations, as
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`defined in Section 4 of the FTC Act, 15 U.S.C. § 44.
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`6
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`COMPLAINT
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`III. VENUE
`16. Venue in this District is proper under 15 U.S.C. § 22; Section 13(b) of the
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`FTC Act, 15 U.S.C. § 53(b); and 28 U.S.C. §§ 1391(b), (c) and (d). Each Defendant is
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`found, resides, transacts business, and/or has agents in this State and District, and a
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`portion of the affected commerce described herein has been carried out in this State and
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`District.
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`IV. THE PARTIES
`Plaintiff Federal Trade Commission (“FTC”) is an independent
`17.
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`administrative agency of the United States government established, organized, and
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`existing pursuant to the FTC Act, 15 U.S.C. §§ 41 et seq., with its principal offices in
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`Washington, D.C. The FTC is vested with authority and responsibility for enforcing, inter
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`alia, Section 5 of the FTC Act, 15 U.S.C. § 45, and Section 3 of the Clayton Act, 15
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`U.S.C. § 14, and is authorized under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to
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`initiate court proceedings to enjoin violations of any law the FTC enforces.
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`18.
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`Plaintiff State of California is a sovereign state. Rob Bonta is the Attorney
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`General of the State of California, the chief legal officer for the state, and brings this
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`action on behalf of the people of the State of California to protect the state, its general
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`economy, and its residents from Defendants’ unlawful business practices. The Attorney
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`General has authority under federal and state law to pursue injunctive and other equitable
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`relief to prevent and remedy the harms caused by anticompetitive conduct.
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`19.
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`Plaintiff State of Colorado is a sovereign state. Philip J. Weiser is the
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`Attorney General of the State of Colorado, the chief legal officer for the state, and brings
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`COMPLAINT
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`7
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 7 of 91
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`this action on behalf of the people of the State of Colorado to protect the state, its general
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`economy, and its residents from Defendants’ unlawful business practices. The Attorney
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`General has authority under federal and state law to pursue injunctive and other equitable
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`relief to prevent and remedy the harms caused by anticompetitive conduct. The state also
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`has authority to seek civil penalties under state law to punish and deter those engaged in
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`unlawful conduct.
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`20.
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`Plaintiff State of Illinois is a sovereign state. Kwame Raoul is the Attorney
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`General of the State of Illinois, the chief legal officer for the state, and brings this action
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`on behalf of the people of the State of Illinois to protect the state, its general economy,
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`and its residents from Defendants’ unlawful business practices. The Attorney General has
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`authority under federal and state law to pursue injunctive and other equitable relief to
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`prevent and remedy the harms caused by anticompetitive conduct. The Attorney General
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`also has authority to seek treble damages and civil penalties under state law to
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`compensate those injured and punish and deter those engaged in unlawful conduct.
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`21.
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`Plaintiff State of Indiana is a sovereign state. Theodore E. Rokita is the
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`Attorney General of the State of Indiana, the chief legal officer for the state, and brings
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`this action on behalf of the people of the State of Indiana to protect the state, its general
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`economy, and its residents from Defendants’ unlawful business practices. The Attorney
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`General has authority under federal and state law to pursue injunctive and other equitable
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`relief to prevent and remedy the harms caused by anticompetitive conduct. The state also
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`8
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 8 of 91
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`has authority to seek civil penalties under state law to punish and deter those engaged in
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`unlawful conduct.
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`22.
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`Plaintiff State of Iowa is a sovereign state. Tom Miller is the Attorney
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`General of the State of Iowa, the chief legal officer for the state, and brings this action on
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`behalf of the people of the State of Iowa to protect the state, its general economy, and its
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`residents from Defendants’ unlawful business practices. The Attorney General has
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`authority under federal and state law to pursue injunctive and other equitable relief to
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`prevent and remedy the harms caused by anticompetitive conduct.
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`23.
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`Plaintiff State of Minnesota is a sovereign state. Keith Ellison is the
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`Attorney General of the State of Minnesota, the chief legal officer for the state, and
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`brings this action on behalf of the people of the State of Minnesota to protect the state, its
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`general economy, and its residents from Defendants’ unlawful business practices. The
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`Attorney General has authority under federal and state law to pursue injunctive and other
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`equitable relief to prevent and remedy the harms caused by anticompetitive conduct. The
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`state also has authority to seek civil penalties under state law to punish and deter those
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`engaged in unlawful conduct.
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`24.
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`Plaintiff State of Nebraska is a sovereign state. Douglas J. Peterson is the
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`Attorney General of the State of Nebraska, the chief legal officer for the state, and brings
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`this action on behalf of the people of the State of Nebraska to protect the state, its general
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`economy, and its residents from Defendants’ unlawful business practices. The Attorney
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`General has authority under federal and state law to pursue injunctive and other equitable
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`9
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 9 of 91
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`relief to prevent and remedy the harms caused by anticompetitive conduct. The state also
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`has authority to seek damages and civil penalties under state law to punish and deter
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`those engaged in unlawful conduct.
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`25.
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`Plaintiff State of Oregon is a sovereign state. Ellen F. Rosenblum is the
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`Attorney General of the State of Oregon, the chief legal officer for the state, and brings
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`this action on behalf of the people of the State of Oregon to protect the state, its general
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`economy, and its residents from Defendants’ unlawful business practices. The Attorney
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`General has authority under federal and state law to pursue injunctive and other equitable
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`relief to prevent and remedy the harms caused by anticompetitive conduct. The state also
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`has authority to seek civil penalties under state law to punish and deter those engaged in
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`unlawful conduct.
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`26.
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`Plaintiff State of Texas is a sovereign state. Ken Paxton is the Attorney
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`General of the State of Texas, the chief legal officer for the state, and brings this action
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`on behalf of the people of the State of Texas to protect the state, its general economy, and
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`its residents from Defendants’ unlawful business practices. The Attorney General has
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`authority under federal and state law to pursue injunctive and other equitable relief to
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`prevent and remedy the harms caused by anticompetitive conduct. The state also has
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`authority to seek civil penalties under state law to punish and deter those engaged in
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`unlawful conduct.
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`27.
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`Plaintiff State of Wisconsin is a sovereign state. Joshua L. Kaul is the
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`Attorney General of the State of Wisconsin, the chief legal officer for the state, and
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`10
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 10 of 91
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`brings this action to protect the state, its general economy, and its residents from
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`Defendants’ unlawful business practices. The Attorney General has authority under
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`federal and state law to pursue injunctive and other equitable relief to prevent and remedy
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`the harms caused by anticompetitive conduct. The state also has authority to seek civil
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`penalties under state law to punish and deter those engaged in unlawful conduct.
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`28. Defendant Syngenta Crop Protection AG is a for-profit company
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`headquartered in Basel, Switzerland and is organized and existing under the laws of
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`Switzerland. Since in or about May 2021, Syngenta Crop Protection AG has been an
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`indirect subsidiary of Sinochem Holdings Corporation Ltd., a global chemical company
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`based in Beijing, China. Syngenta Crop Protection AG’s North American headquarters is
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`located in Greensboro, North Carolina.
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`29. Defendant Syngenta Corporation is a corporate affiliate of Syngenta Crop
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`Protection AG and is headquartered in Wilmington, Delaware. Syngenta Corporation is a
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`corporation organized and existing under the laws of the State of Delaware.
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`30. Defendant Syngenta Crop Protection, LLC is a corporate affiliate of
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`Syngenta Crop Protection AG and is headquartered in Greensboro, North Carolina.
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`Syngenta Crop Protection, LLC is a limited liability company organized and existing
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`under the laws of the State of Delaware.
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`31.
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`Syngenta Crop Protection AG, Syngenta Corporation, and Syngenta Crop
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`Protection, LLC each transacts or has transacted business in this District, and each is
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`engaged in the development, manufacture, and sale of crop-protection products.
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`11
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 11 of 91
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`32. Corteva, Inc. is a publicly held, for-profit corporation headquartered in
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`Indianapolis, Indiana. Corteva is the successor company to the agriscience businesses of
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`E.I. du Pont de Nemours (“DuPont”) and Dow Chemical Company (“Dow”). Corteva is a
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`corporation organized and existing under the laws of the State of Delaware.
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`33. Corteva transacts or has transacted business in this District and is engaged
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`in the development, manufacture, and sale of crop-protection products.
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`V.
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`INDUSTRY BACKGROUND
`Crop-Protection Products
`A.
`34. A pesticide is a chemical used to kill or control a “pest”—a disease, weed,
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`insect, or other unwanted organism. The large majority of pesticides sold in the United
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`States are used for crop protection.
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`35.
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`Farmers (or “growers”) use pesticides to control pests that would otherwise
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`harm their crops. Pesticides used for crop protection are referred to herein as “crop-
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`protection products.” Crop-protection products are vitally important inputs for American
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`farmers. Use of effective crop-protection products allows farmers to dramatically
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`increase crop yields and quality, contributing to a stable food supply.
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`36. Crop-protection products fall into three main categories: herbicides, which
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`target unwanted plants or weeds; insecticides, which target insect infestations (including
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`nematicides, which target nematodes (roundworms)); and fungicides, which target fungal
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`diseases.
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`37. A crop-protection product contains at least one active ingredient, which is
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`the chemical substance that kills or controls the targeted pest. Active ingredients are
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`COMPLAINT
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`12
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 12 of 91
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`combined with inert components such as water, adjuvants, surfactants, and in some cases
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`other active ingredients, to formulate finished crop-protection products. Finished crop-
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`protection products that contain only one active ingredient are referred to as “straight
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`goods,” while products containing two or more active ingredients are called “mixtures.”
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`38. An active ingredient may also be sold in “technical grade” or for
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`“manufacturing use,” before being formulated into a finished crop-protection product.
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`Active ingredients sold in this form require additional processing before they can be used
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`by farmers in finished crop-protection products.
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`39.
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`Several criteria serve to distinguish active ingredients from each other.
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`These include the pest(s) targeted by an active ingredient; the effectiveness of an active
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`ingredient at controlling the targeted pest, which is often measured in terms of crop yield
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`improvements; the crops upon which an active ingredient is suited and registered to be
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`used, which may correlate with geography; the stage of the growing cycle at which an
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`active ingredient may be used; and the performance of an active ingredient under
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`prevailing climate and weather conditions.
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`40.
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`Each active ingredient has what is referred to as a “mode of action,” which
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`is the chemical and biological sequence of events that causes a pesticide to kill or control
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`the targeted pest. While active ingredients that share a common mode of action tend to
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`have similar use cases, there are often differences in performance and other reasons why
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`one active ingredient cannot readily replace another for a given application or in a given
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`condition. Farmers may prefer one active ingredient over another for various reasons,
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`13
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`COMPLAINT
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`including the specific performance characteristics of the active ingredient or a farmer’s
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`past success with an active ingredient. As a result, a chemically equivalent generic crop-
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`protection product is a closer substitute for a given branded product than is a product
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`containing a different active ingredient.
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`Crop-Protection Product Manufacturers
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`B.
`41. Crop-protection product manufacturers create, market, and sell crop-
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`protection products. They may synthesize the active ingredients for their formulated
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`products in their own facilities or purchase the active ingredients from other chemical
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`manufacturers.
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`42. A crop-protection product manufacturer that researches, develops, and
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`patents new active ingredients is known as a “basic” manufacturer. Syngenta and Corteva
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`are basic manufacturers, and they are among the largest crop-protection product
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`manufacturers in the United States and globally. In 2020, Syngenta was the
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`-
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`largest crop-protection product manufacturer in the United States by revenue, and
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`Corteva was the
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`-largest.
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`43. Generic manufacturers primarily sell crop-protection products containing
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`active ingredients initially developed by others and as to which patent and regulatory
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`exclusive-use periods have expired (sometimes called “post-patent” active ingredients).
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`More than a dozen generic manufacturers sell crop-protection products in the United
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`States.
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`14
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`COMPLAINT
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`C.
`44.
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`The Regulatory Process for Crop-Protection Products
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`The Congressionally enacted patent and regulatory framework governing
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`crop-protection products rewards innovation by granting the developer of a new active
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`ingredient protection from competition in that active ingredient for a period of years. But
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`the governing legal framework also contains mechanisms intended to facilitate generic
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`entry and price competition when exclusivity periods end.
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`45. When a basic manufacturer develops a new active ingredient, it can apply
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`for U.S. patent protection for a term beginning when the patent issues and expiring
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`twenty years after the initial patent application.
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`46.
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`The basic manufacturer also benefits from exclusive rights under the
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`Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”). To ensure the safety of
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`crop-protection products, FIFRA requires submission, review, and approval by the
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`United States Environmental Protection Agency (“EPA”) of detailed toxicology and
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`environmental impact data prior to the sale or distribution of any pesticide in the United
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`States.
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`47.
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`Following EPA approval of a new active ingredient, the original registrant
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`(generally a basic manufacturer) receives the exclusive right to cite the data it submitted
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`in support of the active ingredient for a baseline period of ten years. This regulatory
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`exclusive-use period often extends beyond the basic manufacturer’s patent term and
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`effectively extends the basic manufacturer’s right to be the exclusive supplier of products
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`containing that active ingredient.
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`15
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`COMPLAINT
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`48. When the basic manufacturer’s relevant patent and regulatory exclusive-use
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`terms expire, a generic manufacturer may enter the market with crop-protection products
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`containing the same active ingredient. Those products may be generic equivalents of
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`branded crop-protection products or may combine the active ingredient with other active
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`ingredients to create new mixtures. A generic entrant must apply to register its product
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`for sale in the United States under FIFRA, but FIFRA permits generic entrants to rely on
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`data that the original registrant submitted to the EPA. The original registrant, in turn, may
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`be entitled to receive data “compensation” payments from the generic firm, depending on
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`the timing of the generic entrant’s reliance on the data. This reflects FIFRA’s objective of
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`facilitating generic entry and thus encouraging competition.
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`D.
`49.
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`The Traditional Distribution Channel
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`In general, crop-protection product manufacturers sell to distributors that in
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`turn sell to (and in some cases are integrated with) a much larger number of retail outlets
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`dispersed across the country in close proximity to farmers. This path to market is referred
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`to as the traditional distribution channel, or just the “channel.” Sales through the
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`traditional distribution channel account for approximately 90% or more of all sales of
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`crop-protection products in the United States. Just seven distributors account for over
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`90% of sales through the traditional channel, and thus account for approximately 80% or
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`more of all sales of crop-protection products in the United States.
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`16
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 16 of 91
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`50.
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`Selling through distributors is the most efficient way for a crop-protection
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`product manufacturer to reach farmers.
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`(a) Distributors typically offer services and functions such as
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`warehousing, transportation, credit, and marketing.
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`(b) Distributors give manufacturers access to a network of retail and
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`farmer customers, and to the logistics networks required to service widely
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`dispersed customers. By selling through a relatively small number of distributors,
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`a crop-protection product manufacturer can reach thousands of retailers, and in
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`turn, hundreds of thousands of farms.
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`(c) Distributors provide scale and services that would require substantial
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`investments for a manufacturer to replicate. Crop-protection product
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`manufacturers cannot efficiently compete by circumventing the traditional
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`distribution channel and focusing primarily on direct sales to local retailers or
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`farmers.
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`Life Cycle Management of Crop-Protection Products
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`E.
`51. Generic crop-protection products are generally sold at significantly lower
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`prices than equivalent branded products. Accordingly, to the extent generic
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`manufacturers are able to gain market access with respect to a given active ingredient,
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`their entry generally sparks price competition and causes the price and sales volume of
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`branded products containing that active ingredient to decline. This in turn causes the
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`associated profits of basic manufacturers to decline.
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`17
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 17 of 91
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`52.
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`In response to actual or expected generic entry with respect to an active
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`ingredient, Defendants have employed “
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`” strategies (sometimes also
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`referred to as “
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`” strategies). These strategies are designed to inhibit generic
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`entry after the end of patent and regulatory exclusivity, and to minimize the competitive
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`impact of such entry on the prices and market shares of branded products containing the
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`same active ingredient. For both Syngenta and Corteva, loyalty programs have been
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`.
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`VI. DEFENDANTS’ UNLAWFUL CONDUCT
`Syngenta and Corteva each operates a so-called “loyalty program” that is
`53.
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`designed to severely limit the distribution of—and ultimately, farmers’ ability to
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`purchase—competing generic products. Each Defendant designed and administers its
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`loyalty program with the purpose, intent, and expectation that the program will impede
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`generic competition and thereby maintain market prices and branded market share at
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`levels higher than would otherwise prevail, despite the expiration of applicable patent and
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`regulatory exclusive-use terms. Each does so for its own benefit and for the benefit of its
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`distributor partners.
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`54. Under its respective loyalty program, each Defendant offers substantial
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`exclusion payments to distributors conditioned on distributors limiting their purchases of
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`generic crop-protection products containing specified post-patent active ingredients.
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`18
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 18 of 91
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`.
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`55.
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`56.
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`.
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`57. Defendants’ loyalty programs are designed to marginalize generic
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`manufacturers and enable Defendants to retain share while pricing their crop-protection
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`products above competitive levels. As to active ingredients that are the primary focus of
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`this Complaint, each Defendant has substantially achieved these goals. Through its
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`loyalty program, each Defendant has substantially impeded generic manufacturers from
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`19
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 19 of 91
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`providing effective competition and has maintained prices for crop-protection products
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`above competitive levels.
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`A.
`58.
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`Syngenta’s Loyalty Program
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`Syngenta refers to its loyalty program as the “Key AI” program. Syngenta
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`operates this program with both distributors and retailers.
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`59.
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`Syngenta’s loyalty program is designed to maintain supracompetitive
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`profits, which Syngenta shares in part with its distributor and retailer partners, at the
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`expense of farmers. Syngenta does this by restricting access to the traditional distribution
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`channel for generic products, and thereby elevating both market prices and Syngenta
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`share.
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`60.
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`Syngenta’s Key AI program for distributors is implemented through written
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`marketing agreements with participating distributors.
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`61.
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`20
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 20 of 91
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`62.
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`“i.
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`63.
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`21
`21
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`COMPLAINT
`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 21 of 91
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`64.
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`65.
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`stwm}
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`66.
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`COMPLAINT
`COMPLAINT
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`22
`NN
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 22 of 91
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`Corteva’s Loyalty Program
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`B.
`67. Corteva operates
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` that condition exclusion payments
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`to distributors on meeting loyalty thresholds for specified active ingredients.
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`68.
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`69.
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`23
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`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 23 of 91
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`70.
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`S—=~
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`71.
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`24
`24
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`COMPLAINT
`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 24 of 91
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`72.
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`“i.
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`73.
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`25
`25
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`COMPLAINT
`COMPLAINT
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`Case 1:22-cv-00828 Document 1 Filed 09/29/22 Page 25 of 91
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`C. Operation of and Adherence to Loyalty Programs
`For many years, each Defendant has maintained loyalty-program
`74.
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`agreements with a group of distributors that collectively comprise approximately
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` or
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`more of all sales of crop-protection products in the United States.
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`75. Defendants’ agreements with participating distributors have required
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`distributors to mee
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