GM foods groups face huge lawsuit By Jean Eaglesham, Legal Correspondent
The world's biggest life science companies and grain processors will face a multi-billion dollar antitrust action to be launched in up to 30 countries later this year.
The unprecedented lawsuits will claim that companies such as Monsanto, DuPont and Novartis are exploiting bioengineering techniques to gain a stranglehold on agricultural markets.
The action is being brought jointly by the Foundation on Economic Trends, run by Washington-based biotech activist Jeremy Rifkin, and the US-based National Family Farm Coalition, together with individual farmers across Latin America, Asia, Europe and North America.
It will be the biggest antitrust suit ever brought, with the possible exception of that against Microsoft.
"It has literally global implications," said Michael Hausfeld of Cohen Milstein Hausfeld and Toll, one of the 20 US law firms that have agreed to take the cases on a "no-win no-fee" basis.
The move represents the first global challenge to controversial techniques for exploiting genetically modified crops commercially.
Companies take out patents on GM seeds and then lease, rather than sell, them to farmers to be used for one season only. In the US, where GM crops are rapidly becoming the norm, farmers have been sued for replanting GM seeds.
Companies have also developed "terminator" genes that cause GM crops to produce sterile seeds.
Concerns about the potential control this gives life science companies over food, particularly in the developing world, have been exacerbated by a bout of takeovers and mergers within the sector.
Ten companies now own 30 per cent of the $23bn annual commercial seed trade, according to recent estimates, and five of those - Monsanto, Novartis, AstraZeneca, Aventis and DuPont - control virtually all GM crops.
"By the early part of the next century, less than a handful of corporations will possess control over the entire agricultural foundation for every society. You can see the potential for market abuse and manipulation," said Mr Hausfeld.
The legal action comes at a sensitive time for the biotech industry, which is facing growing consumer and political resistance to GM crops in Europe and in developing countries such as India.
The issue seems likely to be raised at November's World Trade Organisation talks in Seattle.
The companies can be expected to fight the lawsuit tooth and nail. They reject any charge of market control.
"There is fierce competition around the world. We have a 42 per cent market share [of the $20bn corn crop] in the US and we've had to work hard for it," said Pioneer Hibred International, the US seed company which is about to be bought by DuPont.
"We've had to prove to farmers that our hybrid is better than any other."
Pioneer added that farmers retained the choice of whether to buy GM or conventional seeds.
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GM FOOD: Antitrust case sows seeds of debate By Jean Eaglesham
The huge antitrust lawsuit against life science companies to be launched later this year will catapult the issue of genetically modified (GM) crops back into public debate.
"It's going to throw open the door to soul searching by governments about the future of agriculture," said Jeremy Rifkin, author of The Biotech Century and prime motivator of the lawsuit to challenge the controversial techniques for exploiting GM commercially.
"In a few years' time, no farmer in the world is ever going to own seeds again - if that's not a case for antitrust [litigation], I don't know what is," Mr Rifkin said.
The lawsuit should throw fresh light on competition policy in sectors where each company's market share is inextricably linked to its intellectual property. Unlike conventional markets, where goods are bought and sold, GM crops are patented, with seeds leased to farmers on an annual basis.
These patent rights are fiercely protected. In the US, where GM crops are widely used, farmers have to give a legally binding undertaking they will not save and replant the seeds.
The life science companies are using bio-engineering skills to ensure these undertakings become self-policing. Delta and Pine Land Company, which is being acquired by Monsanto, and the US Department of Agriculture have received a landmark patent on "terminator" seeds which self-destruct so they cannot be replanted. Other companies are working on seeds that need a chemical trigger to grow.
Bio-engineering can also be used for cross-selling. Some GM crops can only be treated with the insecticide sold by the same company.
Campaigners worry about the control this market structure gives the life science companies, particularly in poor countries where nine out of 10 people may depend on farming for survival. Traditionally, about 80 per cent of farmers in the developing world have saved and exchanged seeds. Will replacing this model with a system for leasing seeds leave such farmers vulnerable to exploitation?
"We feel that instead of improving lives, GM food and crops could strengthen the very market forces that leave the poor poorer and make the rich richer," said Andrew Simms of the charity Christian Aid and author of arecent report on GM crops.
"As companies like Monsanto buy into the major seed companies of countries like Brazil and India, real choice for farmers evaporates. They become locked into a system in which they have little or no choice over what to grow, with which chemicals, who to sell to and at what price," Mr Simms added.
Governments cannot rely on market forces to ensure farmers are not exploited by the life science companies, campaigners argue, since the market is consolidating rapidly and becoming dominated by a few multi- nationals. In the US, for example, one company - Delta and Pine Land - controls more than 70 per cent of the cotton seed market and four companies control 70 per cent of the seed corn market.
"A host of mergers and affiliations in the industry are dangerously concentrating ownership and control of the food chain; in this situation, real choice, competition and consumer sovereignty are an illusion," said Mr Simms.
Supporters of GM crops point out the attributes that can be engineered into food. A UK select committee of parliamentarians in January endorsed the new technology, citing the benefits as "higher crop yields, better nutritional content in foods, fewer herbicides and pesticides and cheaper food".
The crops have an important role to play in alleviating world hunger, the companies claim. "Disease resistance and improved nutritional value mean [GM] techniques would be very valuable to countries where they don't have the infrastructure for insecticide distribution," said Pioneer Hybrid International.
The cost of genetic research is such that companies can only continue innovating if they are allowed to enjoy reasonable market shares and to protect their inventions using patents and leasing systems, the industry argues. It says the sector does not enjoy immunity from normal competition controls - Monsanto, for example, last month agreed to sell its cotton seed business to pave the way for its much delayed acquisition of cotton seed breeder Delta and Pine Land.
The debate over GM crops has a long way to run. The life science giants which already have a battle on their hands to gain consumer acceptance must also convince the courts their market is well policed.