Justice sues to block Deere acquisition of Precision Planting
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WASHINGTON, Aug. 31, 2016 - Deere & Co. and Precision Planting LLC say they plan to fight the Justice Department's attempt to block the farm equipment giant's acquisition of Precision Planting on antitrust grounds.
DOJ filed a lawsuit today in federal court in Illinois alleging that Deere's proposed acquisition of the Monsanto subsidiary would probably raise prices for farmers and virtually eliminate competition in the precision agriculture arena, which is already dominated by Deere and Precision Planting.
“If allowed to proceed, (the merger) would likely lessen competition substantially, and tend to create a monopoly, in the market for high speed precision planting systems in the United States,” violating antitrust laws, the lawsuit says.
“High-speed precision planting technology holds out the promise of improved yields for American farmers by enabling them to plant crops more accurately at higher speeds,” Acting Assistant Attorney General Renata Hesse of the Justice Department's Antitrust Division said in a news release.“Precision Planting has been a key innovator in high-speed precision planting and Deere's only significant competitor in developing and selling these technologies,” Hesse said. “If this deal were allowed to proceed, Deere would dominate the market for high-speed precision planting systems and be able to raise prices and slow innovation at the expense of American farmers who rely on these systems.”
If consummated, the purchase of Precision Planting would, according to the lawsuit:
--eliminate significant present and future head-to-head competition between Deere and Precision Planting in the market for high-speed precision planting systems;
--“bring control of high-speed precision planting systems under one firm;
--“likely cause prices of high-speed precision planting systems to be higher than they would be otherwise;
--“likely cause the quality of high-speed precision planting systems to decrease;
--“and likely result in the elimination of innovation rivalry by the two leading innovators in the high-speed precision planting systems market.”
Deere and The Climate Corporation, a subsidiary of Monsanto that owns Precision Planting, said DOJ has it all wrong.
“Competition in precision agriculture is strong and growing in all of these channels as companies around the world continue developing new technologies,” Deere said in a news release. “The acquisition will enable broader access to these advancements by ensuring farmers have the choice to either buy new machinery or retrofit older planting equipment with the latest new innovations.”
The Climate Corporation's CEO, Mike Stern, said the transaction would “create value by delivering broader access to precision equipment advancements that help farmers increase yield and productivity. Deere & Company and The Climate Corporation plan to defend the transaction on its merits. Climate's business is strong, and our focus continues to be on growing both our digital agriculture and precision hardware business to provide farmers with solutions to help them improve their productivity.”
The proposed acquisition was announced in November.
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