Allegations suggesting ag chem sector players tried to derail an online farm-supply firm’s business in Western Canada haven’t turned up enough evidence for federal regulators to probe the matter further.
Canada’s Competition Bureau announced Tuesday it’s now closed an investigation it launched in 2019 over allegations brought forward by the Canadian arm of Farmers Business Network (FBN).
California-based FBN, which has operated in Canada since 2017, filed a complaint with the bureau in late 2018. According to the bureau, FBN was alleging that “a number of manufacturers and wholesalers disadvantaged, restricted, or blocked the supply of crop inputs” to the company.
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FBN functions via under a membership model through a digital ag platform, allowing growers to buy memberships and provide data to the company in exchange for data-related services such as agronomic advice and price comparison tools.
Membership also allows farmers to buy crop inputs from FBN, which according to court documents relating to the bureau’s probe, “may offer relatively low prices compared to other retailers enabled by efficiencies from FBN’s business model.”
FBN in 2018 had bought a brick-and-mortar Saskatchewan crop input retailer, Yorkton Distributors Ltd., which had “pre-existing relationships with many manufacturers and wholesalers of brand-name crop input products.”
Shortly after it purchased the company, FBN alleged, those manufacturers and wholesalers “refused to supply Yorkton Distributors or restricted supply by denying FBN access to rebate programs.”
The bureau, in its release Tuesday, said its probe focused on three questions:
- if an agreement or arrangement against FBN existed between any of the targets of the bureau’s investigation;
- if any of those players “abused a dominant position by acting with negative intent to exclude FBN from the market;” and
- if any of the alleged conduct “had or would likely, as a result, have substantially prevented or lessened competition.”
The bureau in 2020 sought and got court orders for the target companies to hand over relevant records and information. With those three points in mind, the bureau said the “evidence does not sufficiently demonstrate that an agreement exists between competitors in relation to FBN.”
However, the bureau said, the evidence it compiled still suggests certain market players “engaged in communications with the goal of influencing manufacturers or wholesalers with respect to FBN.”
Furthermore, while that evidence “fails to establish an agreement or arrangement between competitors, these communications are nonetheless concerning to the bureau.”
Such communications, the bureau said, “have the potential to eliminate competitive tension between rivals or establish a ‘hub-and-spoke’ arrangement, wherein a third party facilitates (and therefore becomes party to) an agreement or arrangement between horizontal competitors.”
Companies in that “highly concentrated” sector should be aware, the bureau warned, that communications such as those “could create agreements that contravene the civil or criminal conspiracy provisions of the Competition Act depending on their terms.”
In this specific case, though, the bureau said it focused on whether there was a “causal link between the alleged conduct and the potential effect on competition,” and evidence of such a link was largely “insufficient.”
While there was some evidence FBN was offering lower-than-average prices and its business model offered “additional consumer choice” to farmers, the evidence available doesn’t show the targets’ conduct resulted in a “substantial lessening or prevention of competition” in one or more markets for crop inputs in Western Canada.
However, the bureau said, if “further information” comes to its attention, it “may revisit this decision.”
For its part, FBN’s co-founder Charles Baron said in a separate release Tuesday, the company hopes the bureau’s findings “will help ensure a competitive landscape remains available for Canadian farmers.”
From the outset, Baron said, FBN has “been clear that competition and price transparency are fundamental to lowering farm expenses, so we are pleased the bureau took our complaint seriously and applied its full resources to the matter.”
The outcome, he said, “only reinforces our commitment to bringing transparent pricing, and quality products and services to the Canadian marketplace.” — Glacier FarmMedia Network
