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Justice Dept. probing
Monsanto anti-trust issues
"The Department of Justice has initiated an inquiry about possible anti-competitive conduct in the glyphosate industry," said Monsanto spokeswoman Lori Fisher.
Monsanto stock dropped more than 15 percent early and was down more than 12 percent on the New York Stock Exchange (News - Websites) Friday afternoon, trading at $14.53.
Fisher said the government was seeking information from a number of companies that make and distribute glyphosate, the basic ingredient in Monsanto's top-selling Roundup herbicide. Last year, the company sold some 38 million gallons of the Roundup weedkiller.
Fisher said the company believes it has acted "appropriately" and is cooperating with the inquiry.
Monsanto's patent on glyphosate expired three years ago and the company's sales have been coming under increasing pressure from competitive products and pricing.
In a filing with the Securities and Exchange Commission (News - Websites) on Thursday, Monsanto said it has between five and 10 major global competitors for its agricultural herbicide products and competition from local or regional companies "may also be significant."
The company said in the SEC filing that, while no single customer represents more than 10 percent of its consolidated net sales, its three largest U.S. agricultural distributors and their affiliates represented, "in aggregate, 18 percent of our worldwide net sales in 2002, and 27 percent of our net sales in the United States."
One major U.S. distributor and its affiliates "represented approximately 10 percent of the net sales" in 2002 for Monsanto's agricultural productivity segment, which includes the glyphosate products, the company said in its SEC filing.
The Justice Department investigation comes after a year in which the St. Louis-based company was rocked by market difficulties and upheaval in its top management.
Monsanto's revenue stream has been heavily dependent on its sales of Roundup herbicide and its other glyphosate family of products, but the company has said it is trying to reduce its reliance on that market because of competitive pressures.
The company saw revenues drop 14 percent in 2002 largely because of lower prices and reduced sales of Roundup.
Monsanto closed out 2002 with the unexpected resignation of President and Chief Executive Hendrik Verfaillie in December. The company is still searching for a new leader, leaving the business and investment communities with numerous questions about the company's future.