Tuesday, June 20, 2006

Update on Monsanto-Mahyco in India


In earlier posts (see June archives, 7 June), the battle between Andhra Pradesh and Monsanto-Mahyco Biotech Ltd (MBBL), the Indian arm of Monsanto, was reported. To re-cap, the government of Andhra Pradesh sought an order from the Monopolies and Restrictive Trade Practices Commission (MRTPC) to lower Monsanto-Mahyco's prices on GM Bt cotton seeds. The MRTPC ordered Monsanto to charge no more than 750 rupees for 450g. Monsanto-Mahyco has appealed to the Supreme Court arguing that the fixing of prices is beyond the powers of the Andhra Pradesh government. However, in an interim order a few weeks ago, the Supreme Court refused to grant a stay of the MRTPC order. A full hearing is to take place 5 July, which will be followed in this discussion here.

Further to this battle, the Andhra Pradesh government hosted a meeting in Hyderabad earlier this month. In attendance were officials from Andhra Pradesh, Madhya Pradesh, Gujarat, Karnataka, Maharashtra, Tamil Nadu, and West Bengal. This meeting produced a common memorandum of understanding to join all states as a party before the MRTPC and Supreme Court of India. The governments of Punjab and Haryana sent letters in their absence, in order to demonstrate their support for the united effort.

An update of events has been published in the Weekly Highlights for India, published by the United States Department of Agriculture (USDA) in a Global Agriculture Information Network (GAIN) report. In that report, it was noted that the state governments have also appealed to the federal government to speak on their behalf before the Supreme Court.

Monsanto is quoted in that report as arguing that prices should be market-driven. This is in response to the questions of Mahyco-Monsanto regarding the marked differences in pricing between India and China, prices being much lower in China. Monsanto has argued that different agricultural practices in China (18 times more seed per acre is required) are also relevant to the market and thus the pricing. According to the GAIN report, "any state intervention would go against the intersts of farmers."

On the other hand, it might also be argued that this kind of intervention is critical to the market. Competition law must be concerned not only with the competition between players, but also with the benefit to consumers and thus to the market itself - one into which new players can enter.

The 5 July hearing promises to be an important development in competition law in India.

1 comment:

Satish said...

Under Indian Patent laws, Monsanto or its joint venture do not possess a valid patent for the product. This is because seeds cannot be a subject matter of patent on account of a statutory bar under Section 3(j) of the Patent Act, 1970 (39 of 1970).

Concerning pricing of agricultural commodities a consumer or the Government of his particular state can invoke Section 10 of the Monopolistic and Restrictive Trade Practices (MRTP) Act, 1969 to cause a judicial reference and review to the MRTP Commission in India to enquire into monopolistic or restrictive trade practices. Such a reference is also possible from the Central Government or upon its own knowledge or upon information. The MRTP Act is borne out of the Directive Principles of State Policy embodied in Clauses (b) and (c) of Article 39 of the Indian Constitution which lays down that the State shall direct its policy towards ensuring that the:

(A) Ownership and control of material resources of the community are so distributed as best to sub-serve the common good; and

(B) Operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

The MRTP Commission at India's capital city Delhi, receives complaints both from registered consumer and trade associations and also from individuals either directly or through various Government Departments.

Under the Indian Constitution, the States of India are mandated and well within their right to inform the MRTP Commission and seek justice for their citizens against monopolistic and restrictive trade practices. This is India’s answer to anti-trust practices indulged by trans national corporations. May I add, that this law is being repealed shortly to yield to a new enactment that is on par with the laws in the Western Hemisphere. This new enactment which is already passed and awaiting procedural enforcement is called The Competition Act.