EAST ST. LOUIS – Two antitrust suits at U.S. district court would void contracts throughout North America so Farmers Business Network (FBN) of San Carlos, Calif. can sell seeds and chemicals online.
Plaintiffs claim the ag defendants keep prices high by restricting access to the network.
A primary investor of FBN is a California-based venture capital firm, where former vice-president Al Gore serves as senior partner and former Secretary of State Colin Powell serves as strategic advisor. The firm, Kleiner Perkins, has offices in San Francisco and Shanghai.
Attorneys George Zelcs, of Stephen Tillery’s firm in St. Louis, filed the first complaint for the estate of Jefferson County farmer Michael Piper on Jan. 8.
According to the lawsuit, the annual market for seeds, fungicides, herbicides and insecticides is $65 billion.
Zelcs proposes to certify a class of all persons who bought a crop input manufactured by a defendant from a defendant since 2014. He also proposes to certify a class of all persons who bought a crop input manufactured by a defendant from a retailer other than a defendant.
Bayer, Corteva, BASF, and Syngenta are named as manufacturer defendants.
The suit alleges they controlled production of 85 percent of the seed market, more than 75 percent of soybeans, and more than 90 percent of cotton.
Cargill, Winfield United, and Univar Solutions are named as wholesalers, which according to the suit, accounts for 70 percent of sales volume.
CHS, Nutrien Ag Solutions, Farm Supply, Tenkoz, Simplot, and Federated Cooperatives are named as retailers.
The suit claims that the manufacturers allowed only authorized retailers to sell crop units.
It also claims that more than 12,000 farmers signed up with FBN for objective performance data and 6,000 signed up for a platform designed to sell crop units online.
In 2016, Zelcs claims that CHS sent farmers a letter attempting to discourage them from using FBN.
He wrote that members of an advisory council in a trade association described how the network negatively affected their businesses in 2017.
He wrote that defendants refused to supply FBN.
He wrote that the head of sales for Syngenta in the U.S. learned that a small number of branded inputs had been sold. The head of sales falsely claimed that when online entities acquire products from sources other than authorized dealers or contracted distributors, “you’d better question and be concerned about the quality,” the suit claims.
Zelcs wrote that Syngenta initiated an audit to identify and punish retailers who made the sales.
He called it a boycott and wrote that the network attempted to neutralize it by purchasing Canadian retailer Yorkton Distributors in 2018.
He wrote that Yorkton’s supply agreements with defendants would have provided the network with inventory.
Instead, he wrote, the wholesalers and the retailers threatened to retaliate against the manufacturers if they continued supplying crop units to Yorkton.
Zelcs wrote that the manufacturers, facing the threat, agreed to boycott Yorkton.
He wrote that the network, starved of input, has begun developing products it can sell to farmers from its electronic platform.
He wrote that Canada’s bureau of competition is investigating defendants, and that a Canadian court required defendants to produce records concerning their conduct in the U.S.
He asks for a permanent injunction and triple damages of $999 million under the Clayton Act.
Tillery and seven of his lawyers added their names to the complaint, and three more from the Lowey Dannenberg firm in White Plains, N.Y.
On Jan. 13, Shannon McNulty of Robert Clifford’s firm in Chicago sued the same defendants for farmer John Swanson of New York state.
McNulty wrote that manufacturers and wholesalers agreed not to sell to FBN even though doing so would create a lucrative stream of sales for any wholesaler or manufacturer acting independently.
She wrote that the network has begun developing its own products for farmers.
Clifford added his name to the complaint along with four lawyers from Nussbaum Law Group in New York City and two from the Rupp Baase firm in Buffalo.
Both complaints mentioned AgVend, a Minneapolis business, as a second victim.
On Jan. 18, AgVend released a statement that it had no part in the Piper suit and would explore every legal avenue to remove references to AgVend from it.
“Not only are we inaccurately represented, we categorically deny all allegations pertaining to AgVend in the lawsuit,” the statement reads.
“On the contrary, we have long standing partnerships with many of the defendants and we fully support the work they do to serve the American grower.”
Farmer’s Business Network started in 2014, with support from the Kleiner Perkins venture capital firm in Menlo Park, Calif.
The network’s original registration at the Securities Exchange Commission showed a business address at Kleiner Perkins.
According to Wikipedia, Kleiner Perkins backed Google, Amazon, Twitter, Snap, Square, and Sun Microsystems.
The firm’s website identifies Gore and Powell as part of leadership team.
Online reports show Kleiner Perkins keeps investing in the network.
In 2019, according to Silicon Valley Business Journal, Kleiner Perkins led a round of funding that raised the network’s value above $1 billion.
Last August, an announcement from the network listed Kleiner Perkins among investors in a $250 million round that raised the value to $1.75 billion.
Kleiner Perkins opened the Shanghai office in 2007, and announced plans for a $360 million fund in energy and media.
Kleiner Perkins partner Ted Schein told the New York Times, “This is where opportunity is going to be in the world.”