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From Antitrust Law Daily, May 2, 2017

Deere Scraps Planned Precision Planting Merger-to-Monopoly As Trial on DOJ Challenge Nears

By E. Darius Sturmer, J.D.

Deere & Company announced yesterday that its planned acquisition of Precision Planting LLC from Monsanto Co. is off, after Monsanto terminated the companies’ 2015 agreement to acquire the business. The agreement had been challenged by the Department of Justice Antitrust Division, which filed suit in August 2016 to block the combination, alleging that it was a merger-to-monopoly in high-speed precision planting systems, an innovative technology that enables farmers to accurately plant corn, soybeans, and other row crops at up to twice the speed of a conventional planter. The case was scheduled for trial in the federal district court in Chicago on June 5, 2017 (U.S. v. Deere & Co., Case 1:16-cv-08515).

Government lawsuit. In its antitrust complaint, the Justice Department had asserted that the proposed acquisition would have combined the only two significant U.S. providers of high-speed precision planting systems. Planting at higher speeds can be highly valuable to farmers, many of whom have a limited window each year to plant their crops to achieve the highest crop yields, according to the government. As a result, high-speed precision planting technology is expected to become the industry standard in the coming years.

The Justice Department hailed the decision to abandon the merger as "a victory for American farmers and consumers." Acting Assistant Attorney General Andrew Finch, head of the Antitrust Division, observed that "[h]ad this acquisition gone forward, significant head-to-head competition between Deere and Monsanto’s Precision Planting – competition that has led to lower prices and more innovative products – would have been lost."

Deere response. Deere’s John May, President, Agricultural Solutions and Chief Information Officer, expressed a different sentiment: "We are deeply disappointed in this outcome as we remain confident the acquisition would have benefited customers." May stated that Deere and Monsanto were prepared to present their case for approval of the acquisition in court later this year. "With an opportunity to see this to conclusion, we believe it would have been clear the challenge to the transaction was based on flawed assessments of the marketplace," he remarked.

Two agreements related to Deere's purchase of Precision Planting will also be terminated, including the digital collaboration agreement between Deere and The Climate Corporation, a division of Monsanto. Also ending is an agreement that would have allowed Ag Leader to expand access to and distribution of certain Precision Planting products and technologies.

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