CCI suspects Monsanto JV abused dominant position

By Krishna N. Das

NEW DELHI (Reuters) - Competition Commission of India (CCI) has ordered an investigation into a Monsanto joint venture, saying it suspected the company had abused its dominant position as a supplier of genetically modified (GM) cotton seeds.

The case arose as Indian authorities consider whether to allow commercial growing of the country's first genetically modified food crop, a technology that promises to improve yields but sharply divides public opinion in India.

Local farmers and some of their associations, including one affiliated to PM Narendra Modi's ruling party, have complained that Monsanto overprices its products using its position as supplier of GM seeds used in more than 90 percent of the country's cotton cultivation.

U.S.-based Monsanto launched a GM cotton variety in India in 2002 despite opposition from critics who questioned its safety, helping transform the country into the world's top producer and second-largest exporter of the fibre.

Mahyco Monsanto Biotech (India)(MMB), a joint venture with India's Mahyco, licenses a gene that produces its own pesticide to a number of local seed companies in lieu of royalties and an upfront payment. MMB also markets the seeds directly, though the local licensees together command 90 percent of the market.

Acting on a complaint by India's farm ministry that the JV was charging "unreasonably high" royalties, CCI said there were indications that MMB had abused its dominant position and asked its director general (DG) to complete an investigation within two months.

In its order, the commission also asked the director general to investigate the role of executives in charge of the business if any wrongdoing is found.

MMB said it was evaluating the order and its options, but that it was confident it would be found blameless.

"MMB conducts its business in an honest, transparent and respectful manner and it remains confident that this will be evident after all relevant information has been considered by the CCI," a spokesman said in an email.

"MMB has assured the CCI (of) its full cooperation with the investigation and we remain confident that all allegations which the CCI proposes to investigate will be ultimately dismissed in their entirety."

Its counsel told the CCI that the royalty charged from Indian seed companies was the lowest in the world, that prices had come down over time and innovation had to be rewarded.

A minister involved in the issue said the government was determined to lower GM cotton prices before it potentially allows the cultivation of GM mustard, final trial reports for which are being examined by experts.

(Additional eporting by Rupam Jain and Mayank Bhardwaj; Editing by Dale Hudson and Adrian Croft)