Antitrust Law Daily Wrap Up, ANTITRUST—J.P.M.L.: Suits alleging oil price manipulation centralized for pretrial proceedings, (Oct 23, 2013)

By Jeffrey May, J.D.

The Judicial Panel on Multidistrict Litigation (JPML) has consolidated in the federal district court in New York City a number of actions alleging a conspiracy to manipulate North Sea Brent Crude oil prices and the prices of Brent Crude Oil futures contracts. Five of the actions were already pending in the Southern District of New York (In re: North Sea Brent Crude Oil Futures Litigation, October 21, 2013, Heyburn, J.). A plaintiff in a sixth action, filed in a federal district court in Louisiana, objected to transfer.

Centralization would serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation, the JPML concluded. The plaintiff objecting to transfer contended that his action was brought on behalf of a unique putative class, and that it involved certain matters particular to the oil business in Louisiana and Texas. However, there was extensive factual overlap between all actions, it was decided.

The Southern District of New York was the appropriate transferee district. Five of the six constituent actions already were pending there, as were three potential tagalongs. Moreover, although many of the defendant oil companies were headquartered in Europe, the New York Mercantile Exchange (NYME) and Platts reporting agency were located in the Southern District. The NYME was one of the two exchanges on which Brent Crude oil futures contracts were traded. Platts, a unit of McGraw Hill Financial, Inc., publishes benchmark prices for Brent Crude Oil. According to the plaintiffs, the defendants intentionally reported false bid, offer, and transaction information to Platts—the leading global provider of physical (spot) and contract pricing for the physical and financially settled derivatives Brent Crude oil markets.

European Commission investigation. The European Commission (EC) is currently investigating anticompetitive conduct in the industry. In May, the EC disclosed that it had conducted dawn raids “at the premises of several companies active in and providing services to the crude oil, refined oil products and biofuels sectors.”

The EC did not identify the targets of the dawn raids. However, Norway-based Statoil ASA confirmed at that time that its office in Stavanger was inspected by competition authority officials. In addition, BP plc, Royal Dutch Shell plc, and a number of other oil companies are reported to be targets of the investigation.

This case is MDL No. 2475.

Companies: Statoil ASA; BP plc; Royal Dutch Shell plc; New York Mercantile Exchange; McGraw Hill Financial, Inc.

Cases: Antitrust