John Deere's acquisition of planting equipment technology company, Precision Planting, has hit a hurdle with the US regulator putting the brakes on the buy-out.
John Deere announced it would acquire Precision Planting from Monsanto subsidiary, The Climate Corporation, last November in a $US190 million deal, however anti-trust regulators at the Department of Justice have blocked the sale citing concerns the merged outfit would control 90 per cent of the US market.
The Justice Department said “the acquisition would deny farmers throughout the country the benefits of competition that has spurred innovation, improved quality and lowered prices.”
“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.
“Precision Planting has been a key innovator in high-speed precision planting and Deere’s only significant competitor in developing and selling these technologies.
“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,” she said.
The Department says Deere and Precision Planting are the only “effective” competitors in high-speed precision planting, and account for about 86 per cent of the market.
Both companies introduced high-speed planting systems in 2014, and the Department says competition has “directly benefitted farmers through aggressive discounts and promotions, lower prices and innovative product offerings”.
It says Deere’s acquisition of the company it described as its ‘number one competitor’, would “allow it to control nearly every method through which American farmers can acquire effective high-speed precision planting systems and provide it with the ability to set prices, output, quality and product features without the constraints of market competition.”
Deere said the allegations are “misguided” and competition in the sector is strong.
It said the acquisition would help farmers by accelerating the development of new precision equipment to increase yield and productivity.
“Competition in precision agriculture is strong and growing in all of these channels as companies around the world continue developing new technologies.”
John Deere also bought French precision planting company, Monosem, in the same month last year in a move the company said “helps accelerate John Deere’s market reach in precision planting equipment.”
