Source: https://www.lit-antitrust.shearman.com/Second-Circuit-Affirms-Dismissal-Of-Price-Fixing-Claims-Against-Oil-Companies
Timestamp: 2019-11-22 14:49:36
Document Index: 775076108

Matched Legal Cases: ['§ 4', '§ 7', '§ 12', '§ 1', '§ 2', '§ 1', '§ 2']

Second Circuit Affirms Dismissal Of Price Fixing Claims Against Oil Companies
All Categories Ant-steering Anticompetitive Conduct Antitrust Immunity Antitrust Injury Antitrust Standing Arbitration Attempted Monopolization Bundling Cartwright Act Class Certification Clayton Act, § 4 Clayton Act, § 7 Clayton Act, § 12 Conspiracy Damages Exclusionary Conduct Federal Trade Commission Foreign Trade Antitrust Improvements Act (FTAIA) Government Enforcement Group Boycott Healthcare Horizontal Agreements Horizontal Restraints Information Sharing Internal Documents International Enforcement Joint Venture Market Definition Merger Control Monopolization Motion to Dismiss Nascent Competition No Poach Agreements Preliminary Injuction Price-Fixing Refusal to Deal Regulation of Competition Robinson-Patman Act Rule of Reason Section 5 of the FTC Act Sherman Act § 1 Sherman Act § 2 State Action Defense State Antitrust and Competition Law Summary Judgment Tying Unfair Competition Vertical Restraints All Months November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 June 2017
Federal Trade Commission Orders Otto Bock To Unwind Consummated Merger
Second Circuit Affirms Dismissal Of Pharmaceutical Antitrust Action, Holding The FTAIA’s Import Exclusion Is Effects-Based, Not Intent-Based
Western District Of Kentucky Upholds Complaint Challenging Franchise No-Poach Agreements As Horizontal Restraints Of Trade
On August 29, 2019, the United States Court of Appeals for the Second Circuit issued an Opinion and Summary Order affirming the dismissal of plaintiffs-appellant derivatives traders’ Sherman Act and Commodities Exchange Act claims against defendant-appellees oil companies. Prime International Trading, Ltd., et al. v. BP PLC, et al., No. 1:17-cv-2233 (2d Cir. 2019).
Plaintiffs alleged that defendants manipulated the price of Brent crude oil traded in the North Sea in Europe, affecting the “Dated Brent Assessment” benchmark (Dated Brent benchmark) and thereby skewed prices in derivatives markets indexed to that benchmark. Brent crude oil is extracted from the North Sea. Defendants, in addition to producing, refining, distributing, buying, and selling Brent crude oil, also trade futures contracts based on the oil on global derivatives markets. Defendants were alleged to have submitted false transactions in the physical Brent crude oil market with the intent to manipulate the Dated Brent benchmark to the benefit of their own derivatives trading activities.
Plaintiffs’ posited a multi-step theory of harm. First, defendants made “artificial” trades for physical oil. The prices of these “artificial” trades were then calculated into the Dated Brent benchmark. The Dated Brent benchmark was then incorporated into the ICE Brent Index, which is used to settle Brent-based futures that were traded on markets including ICE Futures Europe and NYMEX, where plaintiffs traded.
In its Summary Order, the Court held that plaintiffs had not adequately pled antitrust injury sufficient to support either their Section 1 or Section 2 claims under the Sherman Act because they did not participate directly in the market that was allegedly manipulated. The Court noted that generally “only ‘participants in defendants’ market’ can show antitrust injury” with a “narrow exception for ‘parties whose injuries are ‘inextricably intertwined’ with the injuries of market participants.’” (citing In re Aluminum Warehousing Antitrust Litig., 833 F.3d 151, 158 (2d Cir. 2016)).
The Court identified two relevant markets for purposes of assessing plaintiffs’ antitrust injury: (1) the physical Brent crude oil market; and (2) the market for derivative instruments that were directly pegged to the Dated Brent benchmark. Plaintiffs only traded derivative instruments indexed to the ICE Brent Index—not the Dated Brent benchmark. The Court noted that plaintiffs conceded that the Dated Brent benchmark was only “correlated” with, but was not “expressly incorporated” into, the ICE Brent Index for the derivatives products that plaintiffs traded. Because plaintiffs did not participate in the market for physical oil, and any manipulation of the physical price of oil would have—at most—indirectly affected the ICE Brent Index, the Court found plaintiffs’ theory of harm to be too attenuated. The Court therefore dismissed plaintiffs’ antitrust claims for failure to plead antitrust injury. Because the Court’s holding on antitrust injury was issued in the form of a summary order, it is not precedential law that binds subsequent decisions.
In the accompanying Opinion, the Court affirmed the dismissal of plaintiffs’ Commodities Exchange Act (CEA) claims because the Court found that applying the CEA to alleged misconduct occurring in foreign trading markets constitutes an impermissible extraterritorial application of the CEA. The Court evaluated the statute’s language and structure to determine the geographic scope that Congress intended for the CEA. The Court determined that the lack of “clear statement of extraterritorial effect” meant that the CEA did not apply to conduct occurring abroad. Because the conduct at issue in this case centered on northern European and global indices, and “[n]early every link in [p]laintiffs’ chain of wrongdoing [] entirely foreign,” the Court held that applying the CEA to that conduct was improper.
CATEGORIES: Antitrust Injury, Antitrust Standing, Motion to Dismiss, Sherman Act § 1, Sherman Act § 2
Prime International Trading, Ltd., et al. v. BP PLC, et al.