Deere Rebuts Justice Department Challenge to Monsanto Deal

By Bob Tita

Deere & Co. said the Justice Department is unfairly accusing the company of trying to monopolize a market that doesn't exist with its challenge to the planned purchase of Monsanto Co.'s seed-planting equipment line.

The government aims to block Deere from buying Precision Planting on grounds the deal would suppress competition for technology that allows farmers to plant crops at accelerated rates. The faster speeds boost productivity and improve the efficiency of farm equipment.

Deere already offers high-speed components on its own planters. In a response to the government's Aug. 31 lawsuit challenging the deal, Deere denied the addition of Precision Planting would give it 86% of all U.S. sales of high-speed precision planting systems.

"Deere specifically denies that there is any meaningful economic market consisting of high-speed precision planting systems," Deere said in a response filed Wednesday in U.S. District Court in Illinois.

A Justice Department spokesman declined to comment on Deere's response.

Deere in its response repeatedly challenged the government's attempts to distinguish high-speed planting systems from slower, conventional planting equipment. The Moline, Ill.-based company described Precision Planting products as optional features for upgrading the performance of a planter.

Deere stressed that Precision's products would remain widely available for non-Deere equipment after the deal. Deere disclosed Wednesday that it struck a deal with rival equipment maker Ag Leader Technology Inc., which makes systems for steering farm machinery and controlling seeding, to sell some of Precision Planting products.

"Ag Leader's capabilities and extensive distribution network will ensure an additional independent and competitive channel for growers and [equipment manufacturers] to purchase Precision Planting's' key components," Deere said.

The government alleges in its complaint that Precision Planting threatened to undermine sales of Deere's own high-speed planting technology by offering farmers the ability retrofit the Precision system onto an existing planter for "a fraction of the cost of a new planter."

The government alleged that Deere would have had to cut prices by 5% to 15% on its own planting system -- known as ExactEmerge -- to remain competitive with Precision Planting. Deere denied the government's claims that "eliminating competition from Precision Planting would allow it to avoid" price cuts.

Precision Planting's U.S. sales were about $100 million in 2015, according to the government. Deere's U.S. sales of planter-related equipment last year were about $900 million. Deere is the world's largest seller of farm equipment, especially high-horsepower tractors and harvesting combines in North America.

With demand for tractors and combines mired in a deep slump, Deere has increasingly looked to raise sales of services and components that improve the productivity of farm machinery and implements, like planters and plows. As part of the Precision Planting purchase, Deere agreed to make it easier for farmers to connect their Deere equipment to Monsanto's Climate Corp. unit, which processes data on crop performance and weather conditions to create farming advice.

Write to Bob Tita at robert.tita@wsj.com

(END) Dow Jones Newswires

October 13, 2016 18:16 ET (22:16 GMT)

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