The sole supplier of cotton planting seed in Australia, Cotton Seed Distributors Ltd (CSD), has provided a court-enforceable undertaking to address ACCC concerns about potentially anti-competitive terms in its agreements with agents.
CSD supplies cotton seed with a mandatory fungicide treatment and optional insecticide treatment from CSD-approved suppliers to growers via a network of agents.
CSD’s agreements with agents prohibited them from applying an insecticide treatment to seed after it had been purchased from CSD, or assisting growers to do so.
As a result, growers who wished to use seed that had been treated with cotton seed insecticide had little choice but to use a CSD-approved insecticide applied by CSD.
The ACCC was concerned that this prohibition had the capacity to harm competition between CSD-approved suppliers and other suppliers of cotton seed insecticide.
CSD acknowledged that its conduct may have raised concerns in relation to its compliance with Australia’s competition laws, which ban anti-competitive agreements.
“The undertaking we’ve accepted ensures that agents and growers are free to deal with the insecticide supplier of their choice, during the current growing season and in future growing seasons,” ACCC Deputy Chair Mick Keogh said.
“Cotton is a major agricultural commodity and seed treatments are critical for growers to manage disease risks.”
“We encourage people in the cotton industry to report any concerns they may have about anti-competitive behaviour to the ACCC,” Mr Keogh said.
CSD has undertaken to implement a competition law compliance program. It will also continue to assess warranty claims by growers concerning seed that agents and growers have treated after buying it from CSD, to establish whether there were quality issues at the time the seed was supplied.
A copy of the undertaking is available at Cotton Seed Distributors Ltd
CSD’s agency agreements have prohibited agents from applying an insecticide treatment to seed after purchase, or assisting growers to do so, since 2018.
Reduced competition in the market for the supply of insecticide treatments for cotton seed may result in growers facing higher prices for and/or receiving lower performance from the insecticides they purchase. It may also lead to reduced innovation in cotton seed insecticides over time, including to deal with new pests, which could result in lower cotton yields.