Court Dismisses Ethanol Market Lawsuits

Green Plains, Midwest Renewable Energy Antitrust Claims Dismissed

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Two of four antitrust lawsuits filed against Archer Daniels Midland have been dismissed. (DTN file photo by Pamela Smith)

LINCOLN, Neb. (DTN) -- Two of four antitrust lawsuits filed against Archer Daniels Midland, alleging ethanol market manipulation, were dismissed by a federal court in Illinois. The remaining two cases are on track for trial in 2024.

The U.S. District Court for the Central District of Illinois in Urbana dismissed lawsuits filed by Green Plains Trade Group Inc. and Midwest Renewable Energy.

The lawsuits all allege ADM intentionally manipulated and artificially depressed the price of ethanol by targeting ethanol sales activity at the Argo terminal in Illinois.

The Argo terminal is the daily location for ethanol trading. The 30-minute trading window at the terminal is considered crucial because it is used to set the daily Chicago benchmark price to determine the value of Chicago ethanol derivatives.

That benchmark is used to price and settle ethanol derivatives on the New York Mercantile Exchange and the Chicago Board of Trade.

Last week the court dismissed the Green Plains lawsuit, ruling the company did not have standing to sue under the Commodity Exchange Act. Green Plains had argued amendments to the CEA in the Dodd-Frank Act in 2010 authorized commodity traders to bring legal action.

"However, a review of the statutory language reveals that the amendments to (the CEA) had no impact on the language that authorized lawsuits only by persons who purchased or sold 'any contract of sale of any commodity for future delivery (or option on such contract or any commodity,'" the court said in its ruling, finding that traders of physical commodities are not authorized to bring suit.

In addition, the court said there was no evidence of "tortious interference" in the market by ADM.

Green Plains alleged ADM had "uneconomically" shipped ethanol to Argo when prices at the terminal were "already lower than those at other terminals."

Plaintiffs alleged ADM "sacrificed its profits" on physical ethanol sales to leverage "even larger profits" on derivatives contracts.

The court also dismissed a similar lawsuit brought by Midwest Renewable Energy on Aug. 9, ruling in part that ADM's actions did not constitute antitrust injury. Antitrust injury is a loss that results in reduced output or higher prices.

"Low prices benefit consumers regardless of how those prices are set, and so long as they are above predatory levels, they do not threaten competition," the court said.

"Hence, they cannot give rise to antitrust injury. Therefore, the injury alleged in Plaintiff's Complaint does not constitute an antitrust injury sufficient to support its claim under the Clayton and Sherman Antitrust Acts, unless plaintiff alleges that ADM depressed prices below a predatory level."

Midwest's complaint alleged that after Nov. 1, 2017, ADM captured 90% to 100% of sales during the half hour trading market-on-close window at Argo.

"However, the proposed market is not limited to the MOC," the court said in its ruling. "The complaint does not allege ADM's share of the relevant market. Because the complaint does not adequately allege either direct evidence of anticompetitive effects or ADM's share of the relevant market, it is dismissed without prejudice."

Similar lawsuits filed by AOT Holding AG and six ethanol companies remain on track for a 2024 trial.

In November 2020, Wisconsin producers United Wisconsin Grain Producers, Didion Ethanol, Ace Ethanol, Fox River Valley Ethanol, Badger State Ethanol and Iowa producer Pine Lake Corn filed their lawsuit.

Unless a settlement is reached, the remaining cases are likely to take years to resolve.

According to a court order, a trial is scheduled for Jan. 30, 2024. All sides have until Nov. 18, 2022, to complete discovery.

Read more on DTN:

"Ethanol Price Manipulation Case Moves," https://www.dtnpf.com/…

"ADM Trial Set for 2024," https://www.dtnpf.com/…

"Ethanol Case Moves to Illinois,"

https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

Todd Neeley