Archer Daniels Midland Asks Court to Dismiss Ethanol Market Manipulation Case

Source: By Todd Neeley, DTN Staff Reporter • Posted: Tuesday, February 2, 2021

OMAHA (DTN) — Six ethanol companies alleging in a lawsuit Archer Daniels Midland manipulated the market have until Wednesday to file a response to ADM’s motion to dismiss the case.

In November, Wisconsin producers United Wisconsin Grain Producers, Didion Ethanol, Ace Ethanol, Fox River Valley Ethanol, Badger State Ethanol and Iowa producer Pine Lake Corn filed a lawsuit in the U.S. District Court for the Central District of Illinois in Urbana.

There are three other similar lawsuits pending in the same court, including a complaint filed by Omaha-based Green Plains Inc. Earlier this week, a federal judge in Nebraska issued an order for a change of venue in the Green Plains case to the Illinois court.

In January, ADM argued in its dismissal motion the cases involving producers suing producers don’t qualify as an antitrust case.

The new lawsuit alleges ADM violated a number of state and federal laws, including monopoly provisions of the Sherman Act and violations of the Illinois Anti-Trust Act, the Illinois Consumer Fraud and Deceptive Business Practices Act, the Wisconsin Deceptive Practices Act and tortious interference with contractual relations under Wisconsin and Iowa law.

“Twenty-five years ago, the Seventh Circuit had already grown weary reminding the bar, ‘Over and over, we stress that antitrust is designed to protect consumers from producers, not to protect producers from each other,'” said ADM’s motion to dismiss.

“But these lessons still have not been learned. In the present case, several ethanol producers assert claims under the antitrust laws for protection from ADM, a fellow producer. They complain that ADM sold too much ethanol too cheaply, causing the market price to fall and plaintiffs to make less money ‘by reducing the prices they received on their ethanol sales.’ This case inverts that formula, repeatedly complaining about ADM ‘flooding’ the market — higher output — with ethanol sold ‘below-market’ — lower prices.

“Plaintiffs have, in other words, admitted that they cannot satisfy the ‘antitrust injury’ requirement of every monopolization and attempted monopolization claim: an injury caused by higher prices.”

ADM added in the motion that, at 10% of the market, it does not have a dominant share to support the plaintiffs’ claim of a monopoly.

ADM also has been sued by Wisconsin ethanol producer Midwest Renewable Energy, as well as AOT Holdings, a Swiss company that owns an energy-trading subsidiary.

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

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

The new lawsuit said that, from 2017 to 2019, ADM controlled 70% of the Argo terminal market and accounted for 90% of ethanol sold during the critical market window.

“ADM’s monopoly power in the U.S. ethanol market is evidenced by the fact that, as described above, it controlled U.S. ethanol market prices,” the lawsuit said.

The six companies filing the new lawsuit have a combined annual production capacity of 385 million gallons.

Todd Neeley can be reached at