The Australian Competition and Consumer Commission has accepted court-enforceable undertakings from each of Nufarm Australia Limited and Monsanto Australia Limited. The undertakings address the ACCC's competition concerns regarding the proposed appointment of Nufarm as Monsanto's exclusive distributor for Monsanto's Roundup range of glyphosate-based herbicides for agricultural uses.
Glyphosate* is the world's largest selling herbicide. In Australia and New Zealand its predominant use is to control weeds in broad-acre farming. Monsanto and Nufarm are major suppliers of glyphosate products in Australia, in competition to products formulated from imported glyphosate acid. In February 2002, the Minister for Customs decided not to impose a dumping duty on glyphosate imported from the People's Republic of China following an application by Monsanto and in which Nufarm was an interested party.
"The undertakings maintain a healthy level of competition in the market for glyphosate", ACCC Chairman, Professor Allan Fels, said today.
In reaching its view the ACCC consulted extensively with competitors, rural merchandisers and distributors and farmer representative bodies.
"The undertakings prevent Nufarm and Monsanto from making an application for a review of the Minister for Customs' decision to not impose a dumping duty on glyphosate imported from China", Professor Fels said. "The ACCC's market inquiries revealed that Monsanto's failed anti-dumping application had already had a negative effect on import competition and that any review of the Minister's decision would be likely to cause further disruption to competition, especially given the length of the review process.
"The ACCC was concerned that any review would undermine the competitive constraint imposed by actual and potential import competition", Professor Fels said. "Accordingly, for the next three years Nufarm and Monsanto must also obtain an opinion from an independent adviser regarding the prospect of success of any proposed glyphosate anti-dumping application prior to lodging such an application. The undertakings also stipulate that the independent adviser must certify that the proposed anti-dumping application is made bona fide and not frivolously or vexatiously.
"The ACCC found that imported glyphosate has played a key role in providing effective price competition for glyphosate supplied to farmers in Australia. This outcome ensures that import competition will continue to benefit rural and regional communities nationally.
"The ACCC also went to great lengths to ensure that farmers around the country are able to readily source competitively priced glyphosate products from their local distributor or rural merchandiser", said Professor Fels. "The undertaking by Nufarm and Monsanto ensures that there are no restrictions on distributors stocking competing glyphosate products as well as those of Monsanto and Nufarm.
"Nufarm has undertaken not to supply Roundup or other glyphosate products on condition that its customers not acquire glyphosate from Nufarm's competitors. Monsanto has undertaken not to 'bundle' its Roundup herbicide with the supply of its Roundup Ready crop seeds**, nor supply its Roundup Ready crop seeds on condition that its customers not acquire glyphosate from Monsanto’s competitors".
Monsanto and Nufarm have also undertaken to develop compliance programs with the aim of training relevant sales, marketing and management staff on compliance with the undertaking.
"This decision reaffirms the ACCC's position that it is unlikely to oppose transactions where imports exercise a credible competitive constraint on domestic prices", Professor Fels said. "The ACCC believes that the undertaking will ensure that prices for glyphosate-based herbicides will continue to face strong competitive constraints while allowing Nufarm and Monsanto to achieve efficiencies in production and distribution. It is crucial that Australian farmers are able to source glyphosate at competitive prices".
The undertaking will appear on the ACCC's public register in due course.