By Jacob Bunge 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 7, 2020).

Canadian antitrust authorities are investigating agricultural companies including Bayer AG, Corteva Inc. and BASF SE, over allegations the companies sought to block a tech startup that aims to shift North American farmers' purchasing online.

Canada's Competition Bureau plans to seek records and communications from the crop-seed and chemical makers, as well as from farm-supply wholesalers like Cargill Inc. and Univar Solutions Inc., according to documents detailing the investigation that were filed Jan. 30 in Canadian federal court.

The civil inquiry follows a complaint to the agency from California-based online retailer Farmers Business Network Inc., or FBN. The seed, pesticide and wholesaling companies allegedly stopped supplying in 2018 the startup's newly acquired Canadian business, and some company officials urged farmers and others in the industry not to do business with FBN, according to the court documents filed by the Competition Bureau.

A Competition Bureau spokesman confirmed the ongoing investigation. Representatives of Bayer, Corteva, BASF, Univar and Cargill said they intend to cooperate with the investigation.

Representatives for Bayer, Corteva and Cargill said their conduct didn't violate Canadian antitrust rules. A BASF spokeswoman didn't comment on the allegations.

The dispute comes as established agricultural companies and new tech-sector entrants compete to steer a technology revolution reshaping the farm sector.

Crop-seed developers, grain companies and tractor makers are racing to gather data from farmer customers on everything from corn yields to soil conditions, using it to develop farm-management services and improve their products. Startups like FBN, Indigo Ag Inc., Conservis Corp. and Farmobile Inc. are pitching software and gadgets to help farmers manage crops and sell grain, often independent of big agriculture companies.

Farmers Business Network, founded in 2014 by former Google and venture-capital executives, is developing an Amazon.com-like online platform allowing farmers to order pesticides, seed and other agricultural supplies delivered directly to their farm.

The California-based company has secured more than $300 million in funding since its launch, including investments from Kleiner Perkins and GV, the venture-capital arm of Google parent Alphabet Inc.

FBN aims to undercut established farm retailers on price, while building a farmer-sourced database for seed and chemical performance that lets paying members compare products and prices. Its effort to develop an online agricultural marketplace has hit resistance, though, as FBN has said the world's main suppliers of high-tech seeds and pesticides generally have refused to sell to the startup, leaving it reliant on generic chemicals while developing its own line of seeds.

"We've faced an extreme amount of resistance from the industry at being able to bring what should be very basic services to growers," said Charles Baron, FBN's co-founder and chief innovation officer.

Seed- and pesticide-company officials have said they prefer to work with bricks-and-mortar retailers with local expertise who can provide on-the-spot service to farmers.

Canadian antitrust authorities are investigating how major farm suppliers responded after FBN in March 2018 acquired a Saskatchewan-based agricultural retail business, which FBN planned to use as an entry point to introduce its platform in Canada.

Though the Saskatchewan operation previously had done business with Bayer, Corteva, BASF, Cargill, Univar and other companies, those companies are said to have stopped after FBN's acquisition, according to the Competition Bureau's court filing.

"I believe that the conduct under inquiry impedes or prevents FBN's marketing of many significant branded Crop Inputs in Western Canada," wrote Daniel Jensen, a senior competition law officer with the agency, in the filing.

The agency is seeking court approval to request companies' email and telephone records relating to FBN's business in Canada, along with information on those companies' supply deals with other retailers and policies regarding online sales.

Some documents already obtained by the agency could suggest a coordinated effort against FBN, agency officials wrote in the filing.

"FBN is a data company that wants to collect and aggregate data to eventually sell for a profit to companies that will use the data to make farmers grow us food for nothing!" wrote Neil Douglas, a Univar executive, in an April 2018 email sent to the wholesaler's agricultural suppliers, included with the agency's filing.

A Univar spokesman said that the company decided to stop doing business with FBN because the two companies' objectives didn't align.

Write to Jacob Bunge at jacob.bunge@wsj.com

 

(END) Dow Jones Newswires

February 07, 2020 02:47 ET (07:47 GMT)

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