Competition and Transgenic Seed Systems

Abstract

The transgenic seed industry provides an ideal case study of major competition policy and antitrust enforcement questions associated with systems. These systems consist, at a minimum, of upstream markets for genetic traits (e.g., herbicide-tolerance and insect-resistance) and downstream markets for traited seeds. Corn, soybeans, and cotton are particularly important crops on which transgenic innovations have had an impact. The article begins by discussing the remarkable nature of the transgenic seed revolution, the role of innovation, and the importance of patent protection. It moves on to examine how rapid consolidation has created systems with significant vertical and horizontal integration. These sections help establish the framework for examining two major types of systems—open and closed. Such systems are defined primarily by whether the combinations or “stacks” of genetic traits contained in traited seed involve the technology of a single firm or multiple firms. They give rise to two major modalities of competition—intrasystem and intersystem rivalry. In transgenic seed, the presence of a dominant firm has arguably had a major influence on the evolution of these modalities, particularly through licensing policies for patented technology. The article highlights the difficult questions associated with the nexus between intellectual property law and antitrust law. Some progress is evident, however, as illustrated by landmark antitrust enforcement actions that address system issues.