This week I read Do killer acquisitions by large pesticide producers hold back innovative pest control technologies?, which I think goes hand-in-hand with the anti-competitive rhetoric being talked about within the industry — whether in seed, fertilizer or crop protection.
The question I seek to look at is whether their findings are legitimate. Let’s dig into it.
First, let’s look at the foundational paper that catalyzed the writing of the pesticide one linked above.
The term “killer acquisition” originally comes from an article by Cunningham et al. in 2021, specifically surrounding pharmaceuticals.
They define a “killer acquisition” as a scenario where an incumbent buys a smaller company primarily to shut down a product or development project that, if successful, would compete with the incumbent's existing revenue, suggesting the buyer isn't acquiring to grow it, they're acquiring to bury it.
Two conditions come through in the paper:
If the target product has overlap, where if it succeeded, it would reduce sales of the acquirer's existing products. In pharma, the authors measured this through therapeutic class and mechanism of action. If the drugs treated different conditions or worked differently, no competitive threat existed and no killer incentive existed.
If after the deal, the target's development pipeline stalls or stops. In pharma, this was measured through absence of new patents, product launches, or clinical trial registrations.
The Cunningham et al. paper found that 5–7.5% of pharma acquisitions in the US fit this pattern, and that these deals clustered just below the deal-value thresholds that trigger antitrust review. In other words, incumbents were buying small enough to fly under regulators' radar.
The authors of the pesticide paper used these frameworks to assess digital and pesticidal acquisitions.
Agricultural Examples
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