Class-Action Lawsuit Accuses Goldman Sachs of Price-FixingAug 6, 2013
A class-action lawsuit alleging a monopoly, including price fixing, in the aluminum storage industry was filed earlier this month.
Reuters is reporting that Goldman Sachs and HKEx are named as defendants in the lawsuit filed in a U.S. District Court in Detroit. To date, just one company has joined the lawsuit but it was filed soon after the U.S. Justice Dept. agreed to open an investigation into price-fixing allegations in aluminum storage. This has become known as a "follow-on" lawsuit.
The complaint against Goldman Sachs, HKEx (which owns London Metal Exchange), and other storage warehouse owners alleges that these companies are working together to inflate the price of aluminum. This complaint follows previous allegations that these same companies increase waiting times thereby raising their rental revenue and increasing the cost of the metal, Reuters reports.
A buyer of aluminum, Superior Extrusion Inc., is the company that has filed the class-action lawsuit against Goldman Sachs and others. Legal experts interviewed by Reuters indicate that that move puts them in a good position to be aware of information when it's first revealed. Superior Extrusion reportedly filed the class-action lawsuit after it heard that federal authorities with the Justice Dept. had launched an official investigation into potential antitrust activities in metals storage, specifically against Goldman Sachs.
Court documents obtained by Reuters indicate the complaint reads that Goldman Sachs, HKEx, and others saw "extraordinary revenues from inefficiencies and deadweight restraints on the economy" and used that to create an "extreme monopoly pricing power and abusive agreements in very unreasonable restraint of trade."
Reuters reports that after the complaint was filed in federal court on Aug. 1 and after hearing complaints and hints of federal and other investigations into potential anti-competitive activity, last week Goldman offered instant access to aluminum at its Metro warehouses, eliminating all waiting times.