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Ethanol Price Manipulation Lawsuit Resurfaces for ADM

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ADM Faces Lawsuit Alleging Ethanol Price Manipulation

Archer-Daniels-Midland Co. (ADM) is set to face a lawsuit accusing the company of manipulating ethanol prices, as Midwest Renewable Energy LLC presents fresh allegations to support its case. US District Judge Colin S. Bruce denied ADM's request to dismiss the case, allowing competitors to accuse the company of violating antitrust laws. The lawsuit claims that ADM sold ethanol below cost at a terminal in Illinois while making bets on lower prices through derivatives trading. The plaintiff cites comments from ADM's head of financial planning and analysis for ethanol, Tony Schmoldt, suggesting the company aimed to drive prices down and harm competition.

Allegations of Predatory Pricing

The lawsuit alleges that ADM's actions resulted in losses for a larger group of ethanol producers. It claims that ADM forced other producers to halt or reduce production and cancel plans for new plants. The court ruling acknowledges that lowering prices can create an antitrust injury if it goes beyond increasing market share and becomes predatory pricing.

ADM's Response and Past Allegations

ADM denies the allegations and states that Schmoldt did not have decision-making authority regarding its ethanol trading business. The company has faced previous allegations of antitrust violations, including a price-fixing conspiracy in the 1990s. ADM has also dealt with other ethanol price manipulation lawsuits. The case will continue to unfold in the US District Court. In conclusion, ADM's involvement in a lawsuit alleging ethanol price manipulation raises concerns about antitrust violations and predatory pricing. The outcome of the case will have implications for the ethanol industry and potentially impact competition within the market.

Hot Take: The Impact of ADM's Lawsuit on New Businesses in the Ethanol Industry

The lawsuit facing Archer-Daniels-Midland Co. (ADM) over alleged ethanol price manipulation could have serious implications for new businesses in the ethanol industry. If the allegations are proven, it could expose a pattern of antitrust violations and predatory pricing that could significantly disrupt market dynamics. New businesses entering the market could face an uneven playing field, with established companies like ADM potentially manipulating prices to their advantage. This could stifle competition and innovation, making it harder for new entrants to gain a foothold in the industry. Furthermore, the lawsuit alleges that ADM's actions forced other producers to halt or reduce production and cancel plans for new plants. If true, this could create a barrier to entry for new businesses planning to establish production facilities. ADM's denial of the allegations and their assertion that the implicated executive did not have decision-making authority over its ethanol trading business adds another layer of complexity to the case. If the court finds in favor of the plaintiff, it could set a precedent that holds companies accountable for the actions of their employees, even if they lack formal decision-making authority. In conclusion, the outcome of this case could redefine the rules of the game in the ethanol industry, with significant implications for new businesses.
Story First Published at: https://financialpost.com/pmn/business-pmn/ethanol-price-manipulation-lawsuit-is-back-to-haunt-adm
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