Deere and Monsanto are heading to court over a U.S. Department of Justice attempt to block Deere’s acquisition of Precision Planting’s equipment business, currently owned by Monsanto.

The DOJ’s Antitrust Division alleges that the acquisition would create a monopoly in the market for high-speed precision planting systems to the detriment of American farmers, according to the suit filed Aug. 31 in U.S. District Court for the Northern District of Illinois.

Deere and Monsanto issued a statement saying the “DOJ's allegations about the competitive impacts of the transaction are misguided, and the companies intend to defend the transaction vigorously against those allegations.”

The suit contends that the takeover would end competitive pressures “and allow Deere to control nearly every method through which U.S. farmers can reasonably acquire effective high-speed precision planting systems as Deere would be able to set price, output, quality, and features.”

The complaint asserts that the agribusiness transaction would “slow innovation” by eliminating rivalry. Other contentious allegations are that the acquisition would:

• Likely cause prices of high-speed precision planting systems to be higher than they would be.

• Likely cause the quality of high-speed precision planting systems to decrease.

• Likely reduce the quality of some high-speed precision planting options in the market.

Company officials say the transaction would expand retrofit options available from Precision Planting to many more products and into new geographic areas.

“We understand the Department of Justice has a job to do; however, The Climate Corporation continues to believe that the sale of Precision Planting to Deere & Company will be beneficial to farmers,” Mike Stern, chief executive officer for The Climate Corporation, said Tuesday.

“This transaction will create value by delivering broader access to precision equipment advancements that help farmers increase yield and productivity. Deere & Company and The Climate Corporation plan to defend the transaction on its merits. Climate’s business is strong, and our focus continues to be on growing our digital agriculture and precision hardware business to provide farmers with solutions to help them improve their productivity.”

Maintaining competitiveness

Deere has long focused on helping U.S. farmers remain globally competitive, said Ken Golden, Deere’s director of global public relations. The acquisition would benefit farmers by accelerating development and delivery of new precision equipment solutions to help boost yield and productivity, he said.

Deere says it would preserve Precision Planting's independence to ensure innovation and speed-to-market and invest in additional innovation efforts at Precision Planting.

Under terms of their November 2015 agreement, Deere would buy Precision Planting for $190 million while The Climate Corporation retains the tablet and cloud Climate FieldView software from Precision Planting that is being integrated into the Climate FieldView platform.

Data-sharing would simplify collection of in-field agronomic data and give fast, high-resolution connectivity between John Deere's equipment and the Climate FieldView platform, the companies say.

After years of development, Deere and Precision Planting introduced their high-speed precision planting systems, ExactEmerge and SpeedTube, in 2014. The companies have called the technology groundbreaking and say it enables farmers to plant twice as fast.

DOJ asserts that only the two firms hold strong patents related to high-speed planting. Belts deliver seeds to trenches without the ricochet typical of hollow seed tubes, nor tumble on trench bottoms. The cartridges and electrically-driven seed meters enable consistent spacing, population and depth.

DOJ further contends that Deere and Precision Planting account for at least 86% of U.S. sales for high-speed precision planting systems. DOJ alleges the takeover would violate the Clayton Antitrust Act. The complaint says intense competition between Deere and Precision Planting has benefited farmers through aggressive discounts and promotions, lower prices and innovative product offerings.

U.S. District Judge Edmond E. Chang has set an initial hearing for Oct. 18 in which both sides are to discuss questions regarding the case and other matters, including any potential settlement.