FTC, 12 States Propose 10-Year Ban on Corteva Loyalty Programs, $35 Million Settlement

The Federal Trade Commission and attorneys general from 12 states on Monday announced a proposed antitrust settlement with Corteva Inc. that would bar the agricultural chemicals company for 10 years from using distributor loyalty programs regulators say shut out lower-priced generic pesticides after patents expired. The deal, if approved by a federal judge, also requires Corteva to pay $35 million to the states.

The proposed settlement is a significant step in a 2022 case accusing Corteva and Syngenta Crop Protection AG of using so-called loyalty payment programs to preserve market share for branded crop-protection products even after patent and regulatory exclusivity periods ended. Regulators alleged the programs rewarded distributors for buying all or nearly all of their needs for certain pesticide ingredients from the brand-name manufacturers, limiting distributors’ ability to carry cheaper generic alternatives.

At the center of the case is a practical issue for farmers: whether distributors will have more freedom to buy and resell generic crop-protection products. The FTC and the states said Corteva’s practices helped keep pesticide prices elevated by restricting competition that should have emerged once exclusivity protections ran out.

Under the proposed order, Corteva would be barred for 10 years from conditioning payments or other benefits on a distributor buying more than 50% of its requirements for a given post-patent active ingredient from Corteva. The company also would be prohibited from using share-based programs that cap a distributor’s purchases of a generic rival at less than 50%, and from using volume-based loyalty programs designed to replicate those arrangements.

The order would also ban Corteva from imposing other conditions that intensify the exclusionary effect of such programs. In addition, the company could not discriminate against or threaten customers because they do business with Corteva competitors, including generic manufacturers.

The restrictions would apply across Corteva’s post-patent active ingredients, not just the examples highlighted in the original complaint. The proposed order resolves only the claims against Corteva, however. The broader litigation against Syngenta remains ongoing.

The settlement was filed in the U.S. District Court for the Middle District of North Carolina in the case Federal Trade Commission, et al. v. Syngenta Crop Protection AG, et al., and Corteva, Inc., Case No. 1:22-cv-00828. The joint motion and stipulated order were filed Sept. 25, and the FTC announced the agreement publicly Monday. The order becomes binding only if it is approved and signed by the district judge.

The states participating in the case are California, Colorado, Illinois, Indiana, Iowa, Minnesota, Nebraska, Oregon, Tennessee, Texas, Washington and Wisconsin. The FTC said the commission voted 2-0 to approve the proposed settlement.

Corteva, a major U.S. agriscience company created from the former Dow and DuPont agriculture businesses and spun off as an independent public company in 2019, would pay $35 million to the state plaintiffs to resolve their monetary claims under the deal.

David Shaw, principal deputy director of the FTC’s Bureau of Competition, said the agreement is intended to remove barriers that regulators say harmed farmers.

“This settlement will do away with unfair corporate practices that have hurt farmers by impeding the sales of lower-priced products,” Shaw said in the FTC announcement. “The agreement the FTC and its state partners secured will give farmers better pesticide options at lower prices, enabling farmers to continue to put food on Americans’ tables.”