Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Alleged conspiracy to inflate aluminum prices violated the Sherman Act, (Aug 2, 2013)

By Peter Reap, J.D., LL.M.

In a complaint filed in the federal district court in Detroit, Superior Extrusion, Inc., alleges, on behalf of a putative class, that certain Goldman Sachs Group, Inc. entities (“Goldman”), London Metal Exchange entities (“LME”), and others combined, conspired, or agreed with one another and other persons to restrain aluminum supplies in LME Detroit Warehousing and inflate aluminum prices, including the Platts MW Midwest Premium or Midwest Premium or Midwest Transaction premium price in violation of the Sherman Act. This premium is a standard contract benchmark price term for purchasing and selling physical aluminum in Michigan, Ohio, Wisconsin, Indiana, Illinois, Minnesota, and contiguous and other areas of the U.S., according to the complaint.

Superior alleges that during at least February 1, 2010 until the present (the “Class Period”) LME has held the sensitive position of controlling (a) exchange-traded aluminum forward or futures contracts in the U.S., and (b) warehousing of exchange-traded aluminum in the U.S. including in the Midwest and the greater Detroit, Michigan area. LME’s monopoly over the trading of aluminum forward or futures contracts in the United States during the Class Period included capturing approximately 97-99% of the trading in such contracts.

Also, according to Superior, Goldman has held the sensitive position of having a monopoly over LME-approved warehousing space for deliveries on LME aluminum and other metals contracts in LME Detroit Warehousing. Through an interconnected series of agreements in unreasonable restraint of trade, Goldman and the LME restrained approximately 1.5 million tons of aluminum in LME Detroit Warehousing.

The defendants generated hundreds of millions of dollars per year in storage revenues during their regime of artificially high storage rates and grossly inefficient and artificially long delays in loading out aluminum, the suit contends. These revenues from inefficiencies and deadweight restraints on the economy are reflections of the defendants’ extreme monopoly pricing power and abusive agreements in unreasonable restraint of trade, according to the complaint.

Superior claims that it was damaged in its property or business by purchasing aluminum based upon Midwest Premium or Platts MW Premium prices that were intentionally and directly inflated by the defendants’ conduct throughout the Class Period. Superior allegedly directly suffered antitrust injury by transacting in the relevant market in which the defendants were intentionally inflating prices.

Superior alleges claims for violations of both Section 1 and Section 2 of the Sherman Act. It seeks an order enjoining the defendants’ challenged conduct, damages, and attorney fees.

The complaint in Superior Extrusion, Inc. v. Goldman Sachs Group, Inc., Case No. 2:13-cv-13315-PDB-MAR, was filed August 1, 2013.

Attorneys: Craig Essenmacher (Lovell Stewart Halebian Jacobson LLP) for Superior Extrusion, Inc.

Companies: Superior Extrusion, Inc.; Goldman Sachs Group, Inc.; London Metal Exchange Limited.

News: Antitrust MichiganNews