Comment on Intellectual Property, Concentration and the Limits of Antitrust in the Biotech Seed Industry

19 Pages Posted: 15 Feb 2010 Last revised: 8 Nov 2012

F. Scott Kieff

George Washington University - Law School; Stanford University - Hoover Institution on War, Revolution and Peace

Geoffrey A. Manne

International Center for Law & Economics (ICLE)

Michael E. Sykuta

University of Missouri at Columbia - Contracting and Organizations Research Institute (CORI); University of Missouri at Columbia - Division of Applied Social Sciences

Joshua D. Wright

George Mason University - Antonin Scalia Law School, Faculty

Date Written: December 31, 2009

Abstract

This comment was filed with the Department of Justice Antitrust Division on December 31, 2009, as "Comments Regarding Agriculture and Antitrust Enforcement Issues in Our 21st Century Economy" in response to the DOJ/USDA request for public comments for the agencies' joint workshops on antitrust issues in the agricultural sector.

Regarding firm size and integration, it must be kept in mind that the agriculture industry in the U.S. has, for good reasons, moved beyond the historic, pastoral image of small family farms operating in quiet isolation, devoid of big business and modern technologies. The genetic traits that give modern seeds their value - traits that confer resistance to herbicide and high yields, for example - are often developed through processes that are technologically-advanced, time- and money-intensive, risky investments, and subject to various layers of regulation, and, at least for some participants in this market, these processes are likely to be more efficiently and effectively conducted within large agribusiness companies having enormous research and development budgets and significant expertise in managing complex business and legal operations.

This short comment discusses the implications for industry structure in the US biotech seed industry of the importance of intellectual property and innovation. Contrary to some commentators and the implicit underpinnings of the DOJ/USDA workshops, neither concentration nor typical licensing practices in the industry are cause for concern, and we counsel caution before intervening in this well-functioning and innovative market.

From the public record it appears that the impetus for much of today’s antitrust interest in the biotech seed industry boils down to efforts to intervene into business disputes between large and sophisticated parties. The inherent uncertainty regarding the economic consequences of specific conduct, coupled with competitors’ poor incentives and the huge costs of error, counsel strongly against antitrust intervention without strong empirical evidence that the conduct has reduced competition and harmed consumers in the form of higher prices, lower quality, or reduced innovation.

Keywords: AMC, Antitrust Modernization Committee Report, DuPont, EPA, FDA, FTC, Frank Easterbrook, Harold Demsetz, Independent Ink, John Paul Stevens, Ken Arrow, Monsanto, Patents, Supreme Court, Timothy Muris, Transgenic, Vertical Efficiencies

JEL Classification: D21, D23, D42, D43, K00, K21, L10, L12, L13, L22, L23, L40, L42, L66, O38, Q16, Q18

Suggested Citation

Kieff, F. Scott and Manne, Geoffrey A. and Sykuta, Michael E. and Wright, Joshua D., Comment on Intellectual Property, Concentration and the Limits of Antitrust in the Biotech Seed Industry (December 31, 2009). Lewis & Clark Law School Legal Studies Research Paper No. 2010-9; George Mason Law & Economics Research Paper No. 10-24. Available at SSRN: https://ssrn.com/abstract=1553064 or http://dx.doi.org/10.2139/ssrn.1553064

F. Scott Kieff

George Washington University - Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States
202-994-4644 (Phone)

Stanford University - Hoover Institution on War, Revolution and Peace ( email )

434 Galvez Mall
Stanford, CA 94305-6010
United States
650-723-3678 (Phone)

Geoffrey A. Manne (Contact Author)

International Center for Law & Economics (ICLE) ( email )

3333 NE Sandy Blvd
Suite 207
Portland, OR Oregon 97232
United States
503-770-0076 (Phone)

HOME PAGE: http://www.laweconcenter.org

Michael E. Sykuta

University of Missouri at Columbia - Contracting and Organizations Research Institute (CORI) ( email )

135 Mumford Hall
Columbia, MO 65211
United States
573-882-1738 (Phone)

HOME PAGE: http://cori.missouri.edu

University of Missouri at Columbia - Division of Applied Social Sciences ( email )

135 Mumford Hall
Columbia, MO 65211
United States

HOME PAGE: http://michaelsykuta.com

Joshua D. Wright

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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