The London Metal Exchange was dismissed from a group antitrust lawsuit in the U.S. over claims it aided companies including Goldman Sachs Group Inc. and Glencore Plc in constricting aluminum supplies to drive up prices.
The exchange, privately owned by Hong Kong Exchanges and Clearing Ltd., carries out some functions as an “organ” of the U.K. government and is therefore protected from the lawsuits on sovereign-immunity grounds, U.S. District Judge Katherine Forrest ruled yesterday in Manhattan.
“While not formed by the U.K. government, the LME is charged by statute with performing the decidedly public function of market regulation,” Forrest said in the decision. “The court itself initially found this result somewhat surprising and counterintuitive.”
Dozens of makers of porch screens, flashlights and other products that contain aluminum sued beginning in August 2013 over claims the metal was being hoarded in Detroit-area warehouses, triggering delays of as long as 16 months in filling orders. The companies being sued all denied the claims.
The plaintiffs, whose lawsuits were joined into a single case, had argued the London Metal Exchange wasn’t immune from the litigation because it entered into warehousing contracts for commercial purposes rather than regulatory ones.
The exchange, which doesn’t own warehouses or the metal stored inside, has storage contracts with warehouses all over the world, including in the U.S., and can affect the time it takes to fill deliveries, according to the ruling.
The manufacturers accused the exchange of driving up prices in cooperation with Goldman, JPMorgan Chase & Co. and their warehousing businesses to increase profit. The banks have also moved for dismissal from the case.
The case is In Re Aluminum Warehousing Antitrust Litigation, 1:14-cv-03116, U.S. District Court, Southern District of New York (Manhattan).