India: Competition Commission Of India (CCI) To Investigate Global Hybrid Seeds Giant Monsanto For Abuse Of Dominance In Relation To Alleged Excessive And Discriminatory Royalties For Bt Cotton Seeds

Last Updated: 15 March 2016

Article by MM Sharma, Head Competition Law & Policy Practice, Vaish Associates, Advocates, New Delhi, India

Comment- This CCI order raises an important issue which places the manner of enforcement of intellectual property rights in India vis-à-vis the competition law under question. The CCI order gives a prima facie impression as if the CCI is entering into the domain of fixation of royalties for sub-licensing of Bt. cotton seed patents, but a careful reading would show that the CCI has referred the allegation of abuse of dominant position/market power of Monsanto mainly due to Monsanto refusing to honor the royalty and trait values fixed by various State Governments besides placing unfair and discriminatory conditions on the seed producers as compared to Monsanto's subsidiaries/group companies in India.

Majority Order

The CCI by its order dated February 10, 2016 has initiated a detailed investigation into the allegedly excessive royalty fee charged by Monsanto, Inc. (USA) through its subsidiary in India, Mahyco Monsanto Biotech (India) Ltd. (Mahyco) for licensing of its patented Bt. Cotton seeds technology to Indian seeds companies.

The investigation has been ordered in pursuance to the reference made by the Ministry of Agriculture & Farmers Welfare (MOA&FW), Govt. of India as well as cases filed by several other seeds producers.

It has been alleged that seed producers entered into sub-license agreement with Monsanto for procuring its Bt. cotton technology in consideration of an upfront one time non–refundable fee of INR 50 lakhs and recurring fee called as 'Trait Value'. The 'Trait Value' is the estimated value for the trait of insect resistance conferred by the Bt. gene technology. It forms a significant portion of the Bt. cotton seed prices. It is stated that the trait value is determined by Monsanto on the basis of Maximum Retail Price (MRP) of 450 gm. seed packet, in advance for each crop season.

It is alleged that in the year 2005, the trait value fixed by Monsanto was INR 1250/- per packet which led to high value of Bt.  cotton seeds manufactured using the said technology i.e. Rs.1700/- – INR 1800/- per packet. This was allegedly very high in comparison to the price of non-Bt.  cotton seeds which were available for Rs.300/- per packet.

It was noted by the CCI that Mahyco, entered into a "Supplementary and Release of Claims Agreement" with the Indian companies in 2007 and started charging INR 148.15/- per packet on an MRP of INR 750/- per packet as the trait value. Thereafter various State Governments have come up with their own legislations regarding fixation of MSP and trait values.

The seed companies have made representations to Monsanto for settlement of payment from 2010 onwards in line with the order of Bombay High Court dated June 17, 2015 in WP. No.3255/2015. However, Monsanto has allegedly invoked arbitration proceedings before the Hon'ble Bombay High Court seeking interim reliefs against the seed companies to deposit trait value for the year 2015-16 as estimated by it. The same is pending for adjudication.

It has been alleged in the reference of MOA&FW that Monsanto has issued notices to Informants asking them to withdraw their claims which was followed by termination notices. It has been alleged that Monsanto is relying on such termination notices to compel other seed companies (sub-licensees) to pay excessive and extortionary trait value. It was alleged that the conditions of sub-licence regarding disposition of inventory are unfair and restrict the ability of the Informants to deal with a new technology provider even if it's available at a lower cost. Lastly, it was considered that the subsidiaries of Mosanto in India are receiving the technology without entering into any sub-licencing agreement.

The CCI considered that the relevant market in the present case should be that of market for 'provision of Bt. cotton technology'. Bt.  cotton has the inherent ability to fight cotton pests. The said technology is different and more efficient from traditional methods of pest control used in cultivation of cotton seeds such as the use of cotton sprays. The conditions of competition throughout India for the aforesaid products are homogenous and the relevant geographic market in the present case should be India.

Out of the 1128 Bt cotton hybrids approved by the Genetic Engineering Appraisal Committee till May, 2012, 986 hybrids were incorporated with Bt technology sub-licensed by Monsanto. Therefore it appears that Monsanto has significant market share in the upstream relevant market, thus prima-facie enjoying dominant position in the market.

The CCI took note of the fact that various terms and conditions in the sub-licensing agreement appear to be stringent and unfair, particularly in light and would have the effect of denial of market access to the seed manufacturers, given their dependence on MMBL for Bt cotton technology. The CCI noted that imposition of such conditions for notification coupled with stringent termination conditions not only discourages the sub-licensees from dealing with the competitors, but also amounts to restriction of development of alternate Bt cotton technologies. Further, charging of trait value payable on the basis of MRP of the seed packet apparently has no economic justification in light of the fact that performance of the Bt cotton crop depends not only on the BT cotton technology but also on other factors like genetic composition, climatic conditions etc. and appears to be unfair.

It is not clear whether the group entities are being subject to similar pricing and stringent sub-license agreements. Any discrimination on this account has the potential to distort the level playing field in the downstream Bt cotton seeds market and needs to be examined.

The termination conditions are found to be excessively harsh and do not appear to be reasonable as may be necessary for protecting any of the IPR rights, as envisaged under Section 3(5) of the Act. The CCI noted that such agreements discourage and serve as a major deterrent for the sub licensee from exploring dealing with competitors. The agreements thus, have the effect of foreclosing competition in the upstream Bt Technology market which is characterised by high entry barriers. In view of these aspects, the agreements entered by MMBL with sub-licensees appear to be causing appreciable adverse effect on competition in Bt cotton technology market in India, in terms of Section 3(4) r/w Section 19(3) of the Competition Act, 2002 (Act).

Thus, the CCI found a prima-facie case of violation of Section 4(2) and Section 3(4) of the Act. The DG has been directed to investigate the matter and complete the matter within 60 days from the date of receipt of this order.

The Dissenting Order-

In its minority order, Mr M.S. Sahoo, Member of the CCI, made reference to the sub-licensing agreements entered prior to enforcement of the Act and held that the same cannot be analysed for a violation of the Act. As regards sub-licensing agreements of 2015, the minority order was of the view that the royalty fee charged by Monsanto can be considered excessive only when it is higher than the competitive prices, namely, prices in different geographical market for the same product or prices charged by competitors in the same product market. Neither of the cases referred to the CCI provides any of these. The rate of trait fee is not higher than those applicable prior to the enforcement of the Act. Hence the trait fee applicable in 2015 cannot be considered excessive for a violation of Section 4(2)(a)(ii) of the Act. Moreover, the Minority order noted , since the Central Government has decided to fix the prices for the seeds as well as the Traits under section 3 of the Essential commodities Act,1955, nothing survives in the reference.

As regards imposition of unfair condition by Monsanto restricting seed manufacturers from obtaining similar technology from competitors, the minority order observed that these clauses require seed manufacturers to notify to Monsanto, if they wish to develop seeds on a trait available with competitors. These do not prohibit Informants or restrict their ability to engage with competitors; these merely require a notification to Monsanto. The minority order found that there is no merit in warranting an investigation under Section 26(1) of the Act.

(Source: CCI: Order dated February 10, 2016. For full text see CCI website)

Specific Questions relating to this article should be addressed directly to the author.

© 2016, Vaish Associates Advocates,
All rights reserved
Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions