Antitrust Lawsuit Accuses Major Fertilizer Manufacturers of Illegal Price-Fixing Scheme

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A proposed antitrust class action lawsuit alleges that some of the biggest producers and sellers of fertilizer have colluded in a price-fixing scheme for nitrogen, phosphate and potassium fertilizers.

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The 24-page antitrust lawsuit claims that six of the largest fertilizer producers in the United States—Canpotex, CF Industries Holdings, Koch Agronomic Services, Nutrien AG Solutions, The Mosaic Company and Yara International—violated the federal Sherman Antitrust Act by conspiring to inflate and fix fertilizer prices since at least January 1, 2020.

Notably, before the companies began their alleged price-fixing scheme, the market for nitrogen, phosphate and potassium (NPK) fertilizers was competitive, with price increases that were “transitory,” the case says. The lawsuit contends that the defendants’ illegal price-fixing scheme has suppressed competition and forced indirect purchasers of NPK fertilizers to pay artificially inflated, supra-competitive prices.

The lawsuit conveys that NPK fertilizers are “favored” by American farmers because they supply the three macronutrients needed for healthy crops, and are concentrated, predictable and fast-acting. However, the collusion among fertilizer manufacturers has led to a “massive” jump in price for NPK fertilizers, while crop revenues for farmers are “comparatively stagnant,” the case says.

The lawsuit claims that the structure of the NPK fertilizer market makes it more likely to be susceptible to a price-fixing conspiracy. Like many markets where collusion becomes a problem, the market is small and highly concentrated, with the number of fertilizer manufacturers dropping rapidly since the 1980s, the case says. Per the suit, the defendants collectively control over 80 percent of the nitrogen fertilizer market in North America and over 90 percent of the North American phosphate and potash, or potassium, markets. 

Further, the suit says, the NPK products are standardized, which makes it easier for the defendants to coordinate and agree on a pricing structure, and the companies have allegedly had opportunities to “collude” at trade association events.

Per the filing, the NPK fertilizer market has high barriers to entry because expenses to purchase machines and a plant, along with costs associated with research and development, make entering the fertilizer market prohibitively expensive and discourage new players.

Likewise, the filing states that demand for NPK fertilizers is “inelastic” and rarely changes because the fertilizers cannot be “interchanged freely” with other goods to produce the same balanced nutrients to crops, making the market more susceptible to schemes and collusion.

Interestingly, the lawsuit says, the NPK fertilizer market has a history of antitrust “scrutiny;” the complaint describes a 2008 lawsuit brought against major NPK fertilizer manufacturers that alleged producers “shared market information, allocated volumes, and restricted output as part of a tight-knit global cartel.” Some of these companies, the lawsuit says, ended up settling for millions of dollars, with settlements of approximately $43.75 million each from companies like Mosaic and PotashCorp.

More recently, the case says, the United States Department of Justice opened a formal antitrust investigation to determine whether NFK fertilizer producers “colluded or coordinated” to raise prices for nitrogen, phosphate and potash fertilizers.

The NPK fertilizer antitrust class action lawsuit seeks to cover all individuals and entities in the United States and its territories who purchased NPK fertilizers directly from any of the defendants or their subsidiaries or affiliates between January 1, 2020 and the date on which a class is certified.

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