Adding more trouble to the woes of Monsanto recently, the Competition Commission of India (CCI) ordered an investigation against it. CCI found the global agriculture behemoth of violating competition law in the Indian seed market. The investigation follows a complaint filed by Hyderabad based Amar Biotech Ltd., a company engaged in the business of GM hybrid seeds.
The Informant alleged that Mahyco Monsanto Biotech (India) Ltd (MMBL) the Indian partner of Monsanto abused its dominant position in the market by imposing unfair and discriminatory conditions in Sub‐licensing Agreements (SLAs) while sublicensing its Bt cotton technology to Indian seed companies.
The Informant had entered into a sub licensing agreement (SLA) with MMBL to access its Bt cotton technology in February, 2006. As per the agreement, informant paid a one‑ time payment and a pre‐determined sale price for every 450 gram of Bt cotton seed packet sold by it. Meanwhile, state governments of Maharashtra, Andhra Pradesh and Telangana came up with notifications regarding fixing of trait value and seed price.
The Informant alleged that despite state governments having fixed seed price yet MMBL insisted on higher rates than what have been fixed by the notifications.
Technology transfer and turbulence in seed industry
Monsanto accumulated huge royalties without having any patent over its first generation of Bt technology (BG‑I) in India. However, BG‑ll, its second generation technology, was granted patent in 2009. Through MMBL, it sub‐licensed its technology to around 40 Indian seed companies. And here lies the storm.
It is alleged that Monsanto charges very high fees for licensing its technology and forces farmers to pay for it. Also, SLAs entered by it are in the nature of an exclusive supply agreement which means that sub‐licensee is prohibited from competing with the other companies with similar technology in the market.
In a first of its kind, in May 2015, Telangana government had attempted to regulate royalty (trait value) on (BG II) through a government order but MMBL managed to obtain an interim stay on the order in Andhra Pradesh high court.
In February this year Andhra Pradesh agriculture minister wrote to union commerce ministry seeking compulsory licensing or revocation of patent for Bt cotton technology. He had also previously written to CCI in November 2015 to probe whether MMBL abused its dominant position in the Indian seed market.
Consequently, in February this year, CCI ordered investigation on government complaint filed by the union agriculture ministry and three Indian seed companies.
In December, 2015 with the view to put Bt cotton seeds price under control and the need to bring uniformity in their prices, union agriculture ministry notified the Cotton Seeds Price Control Order(CSPO) under section 3 of Essential Commodities Act,1955. The 2015 order also defined phrases like GM Technology, GM trait and Royalty (trait value). Royaltly is the amount which the licensor collects from the licensee for granting license to GM technology.
Though government controls the price of seeds paid by the farmers to the seed companies but neither union government nor any state government has ever intervened with the license fee charged by the Monsanto to seed companies. Section 5 of the order states that the government while fixing the maximum selling price, shall also fix and regulate the seed value and license fee including royalty or trait value, if any, that constitutes components of the maximum selling price.
Monsanto has challenged the 2015 order before Delhi high court. It would be compelling to see would government attempt to regulate fee for technology transfer outside the ambit of IPR framework when there is already compulsory licensing provision under the Indian Patents Act, 1970.