Monsanto JV under CCI lens over possible abuse of market dominance

The Competition Commission of India (CCI) has ordered an investigation into US biotech major Monsanto's joint venture in India over possible abuse of its dominant position of the company as a supplier of genetically modified (GM) cotton seeds.

Mahyco Monsanto Biotech (MMB), a 50:50 joint venture between Maharashtra-based Mahyco and Monsanto Holdings Pvt Ltd, has sub-licensed the Bollgard II and Bollgard technologies to 28 Indian seed companies in lieu of royalties and an upfront payment.

Mahyco Monsanto Biotech also markets the seeds directly, though the local licensees together command 90 per cent of the market.
 
The Bollgard gene technology produces its own pesticide that protect plants in-built protection for cotton against destructive American Bollworm Heliothis Armigera infestations, and contains an insecticidal protein from a naturally occurring soil microorganism, Bacillus thuringiensis (Bt). Bollgard II technology contains a superior double-gene technology - Cry1Ac and Cry 2Ab, which provides protection against bollworms and Spodoptera caterpillar.

But, local farmers and some of their associations have complained that Monsanto overprices its products using its position as supplier of GM seeds used in more than 90 per cent of the country's cotton cultivation.

The case comes up at a time when authorities are considering whether to allow commercial growing of genetically modified food crop, a technology that promises to improve yields but sharply divides public opinion in India.

US-based Monsanto launched a GM cotton variety in India in 2002 despite opposition from critics who questioned its safety.

The CCI investiation follows a complaint by the agriculture ministry that MMB was charging "unreasonably high" royalties. CCI also said there was prima facie evidence that MMB had abused its dominant position and asked its director general (DG) to complete an investigation within two months.

In its order, the commission also asked the director general to investigate the role of executives in charge of the business if any wrongdoing is found.

MMB said it was evaluating the order and its options, but that it was confident it would be found blameless.