Competition Bureau investigates major crop input makers, sellers

Canada’s Competition Bureau is investigating allegations that a number of established manufacturers and wholesalers of crop inputs refused to supply a start-up business with product.

Farmers Business Network (FBN) entered the Canadian marketplace in late 2017.

FBN is a California-based ecommerce company that provides its farmer-members with digital agronomic advice, crop input price transparency tools and performance analysis tools.

It also sells crop inputs and as part of its Canadian entry strategy, the company acquired Yorkton Distributors Ltd., a brick-and-mortar crop input retailer based in Yorkton, Sask.

Yorkton Distributors had pre-existing relationships with many manufacturers and wholesalers of brand name crop input products.

Shortly after FBN purchased the company, the manufacturers and wholesalers refused to supply Yorkton Distributors with product or restricted supply by denying FBN access to rebate programs.

At the behest of FBN, the Competition Bureau has launched an investigation into the policies and practices of those manufacturers and wholesalers of branded crop inputs.

The bureau has filed court documents with the Federal Court of Canada seeking court approval to access “records and information” from a number of parties.

It is looking for correspondence and files pertaining to FBN and any communication and/or co-ordination between the parties to assess whether further investigative steps are warranted.

The parties include manufacturers BASF Canada Inc., Bayer CropScience Inc., Corteva Inc. and Monsanto Canada and wholesalers Cargill Limited, Federated Co-operatives Limited, Winfield United Canada and Univar Canada.

“Some of these parties may have engaged in communications that are suggestive of co-ordinated behaviour in relation to FBN,” the bureau said in the court documents.

The bureau said the practices of the manufacturers and wholesalers may impede or delay FBN’s expansion into the Canadian market “and/or may cause FBN to exit the Canadian market altogether.”

The Western Producer contacted all of the named parties in the court documents. Five responded.

Bayer and Corteva both said they are co-operating with the investigation.

“We believe the actions we took in this matter were done unilaterally and fully comply with Canada’s competition law,” Bayer said in an email.

“Our conduct and business model was and is compliant with Canadian competition laws and completely appropriate for our business and, most importantly, for our farmer customers,” Corteva said in an email.

BASF said it had no comment.

FCL said it can’t provide comments on any ongoing investigations or hearings.

Univar said it made the decision to stop doing business with Yorkton Distributors because Univar’s objectives did not align with FBN’s. It denies that its decision violates Canadian antitrust rules.

One of the documents included in the bureau’s court filings is an email by Neil Douglas, vice-president of agriculture with Univar Canada Ltd., to his team.

In the email dated April 6, 2018, Douglas said he had informed FBN that Univar would no longer be doing business with the company beyond July 31, 2018.

“FBN is a data company that wants to collect and aggregate data to eventually sell for a profit to companies that will use the data to make farmers grow us food for nothing,” he said.

“If anyone thinks socialism is going to feed the world just call Russia first and see how that worked out.”

Douglas made reference to FBN’s “aggressive pricing” tactics and its impacts on the crop input industry.

“Margin compression is not the way to a brighter future and that is all FBN is currently offering,” he said.

FBN co-founder Charles Baron said the company faced a similar response when it launched in the U.S. in 2014 but the Canadian industry reaction was more immediate.

“These actions caused serious harm and really blocked FBN from being able to provide and fulfil a lot of the basic services we provide growers,” he said.

In response to what FBN deemed to be a blockade from manufacturers and wholesalers of brand name crop inputs, FBN bought Great Northern Growers (GNG), a manufacturer of generic crop input products, in the summer of 2019.

Baron said the GNG product portfolio is small compared to what the major players in the crop input business can offer, but at least it gives the company some product to sell to its approximately 1,200 Canadian members.

FBN sells mostly generic products in the U.S. as well. The major manufacturers won’t sell branded product to the company but it does get some branded product from wholesalers, brokers and retailers.

Baron said the company just wants the ability to compete in the Canadian market.

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