Planting the Seeds of Market Power: Digital Agriculture, Farmers’ Autonomy, and the Role of Competition Policy

Abstract

Digital technologies are expected to radically transform agriculture, especially as the use of collected data could influence farmers’ decision-making and facilitate precision farming. In the face of major food security challenges, production-enhancing and resource-efficient innovations in digital agriculture are generally considered beneficial. However, digital agriculture could also exacerbate existing power imbalances, dependencies and barriers to entry in the already highly concentrated agricultural inputs markets of seeds and agrochemicals, particularly since the few remaining conglomerate suppliers could misuse their market power and platforms for digital agriculture services could benefit from network effects. As data-driven digital agriculture grows rapidly as a valuable asset and an important input factor for agricultural production in the European Union, it is important to assess its role from a competition policy perspective. This chapter explains how some digital agriculture-related practices may lead to distortions of competition and deteriorations of farmers’ autonomy, but nonetheless do not necessarily violate EU competition rules. In response to these market power concerns, however, authorities may seek regulatory solutions beyond EU competition law. In that regard, (proposals for) laws on unfair trading practices, sector-specific legislation and self-regulatory mechanisms are worth exploring, not in the least on the basis of the EU’s Common Agricultural Policy.