The London Metal Exchange (LME), according to its website, is the world center for metals trading. To maintain this status, the LME operates bank-owned warehouses throughout the world that house all kinds of metals. The metals are stored there by a wide variety of manufacturers, ranging from car companies like General Motors (GM) to beverage corporations like Coca-Cola. In recent months, these manufacturers have accused the LME of intentionally and artificially delaying shipment times and only shipping out the minimum amounts required. This alleged act of market manipulation is suspected of causing both the storage fees and the cost of the metals to increase dramatically.
Metal Warehousing Antitrust Litigation
European Union (EU) antitrust regulators are now looking into these allegations, specifically by monitoring certain warehousing firms within the LME’s Warehouse Committee. In an article for The New York Times, David Kocieniewski reported that Goldman Sachs, one of accused warehousing firms, allegedly engages in what a forklift driver called a “merry-go-round of metal.” This merry-go-round reportedly involved thousands of pounds of metal bars being aimlessly transported from one warehouse to another, never actually leaving the premises, simply to lengthen storage time and fulfill the LME’s rules about how much material must be transported daily.
These actions, if substantiated, would constitute a violation of both the Sherman Antitrust Act and the Commodity Exchange Act, and ultimately ends up costing the everyday consumer extra money every time he or she purchases a car or cracks open a soda. Goldman Sachs has vehemently denied the allegations, stating that any delays were not deliberate, but could be attributed to a lack of transportation equipment or the inherent difficulties of moving and stacking such heavy material. If any of the warehousing firms are found guilty, the EU could potentially fine the firm 10 percent of its global revenue. Some of that money could be used to compensate the consumers of whom the LME took advantage.
Many lawmakers are currently striving to make that compensation a reality. LME litigation is possible in the future, and those interested should not hesitate to contact Attorney Group with any questions. We can address your concerns and provide you with further information about the ongoing investigation. Those who have a claim can be connected with one of our affiliated attorneys. Don’t wait; call Attorney Group today.
