ADM Accused of Anticompetitive Activity in Ethanol Market

Agriculture giant Archer Daniels Midland Company (ADM) received a complaint on Wednesday in the Central District of Illinois regarding alleged anticompetitive activity in the ethanol market. The company was accused of exercising monopoly power in the Argo Terminal Market to control and lower prices in the United States ethanol market. 

The plaintiffs in the suit include United Wisconsin Grain Producers LLC; Didion Ethanol, LLC; Ace Ethanol, LLC; Fox River Valley Ethanol, LLC; Badger State Ethanol, LLC; and PLCP, LLLP. They explained that ethanol, also known as ethyl alcohol, is derived from sugars, starches, and other material used in corn. It is used commonly for gasoline and is reportedly part of reducing dependency on fossil fuels and cleaning the environment. ADM produces and sells ethanol, along with the plaintiffs. 

The ethanol companies claimed that they “do not have the power to control the ethanol market” or change its price, but rather sell at market prices. Prices from the Argo Terminal Market, the market of a fuel terminal in Argo, Illinois, reportedly determines the prices of ethanol sold nationwide at other terminals and between private parties using Producer Sales Contracts. The Chicago Benchmark Price is also derived from the Argo market. The complaint explained that “buyers and sellers in the ethanol market rely heavily on the proper functioning of the Argo Terminal Market and accept the Chicago Price Indexes as an accurate measure of the market price for ethanol.” 

Because ADM is one of the largest ethanol producers, it reportedly had more control over the market than the plaintiffs. They alleged that the defendant “intentionally manipulated and artificially depressed the price of ethanol.” Reportedly, during the MOC Window, the defendant targeted ethanol sales activity and depressed the price indexes. Wednesday’s complaint said that ADM profited from this action because it made “outsized investments in Short Position Chicago Ethanol Derivatives,” making up money it lost because of the reduced price of goods because its derivatives would increase in value. 

The complaint purported that the actions of ADM harmed the plaintiffs and that ADM intended to drive its competitors out of the market and grab more control. The complaint explained the steps ADM allegedly took, starting in 2017, and said that the defendant’s actions were illegal under the Commodities Exchange Act. 

The plaintiffs, represented by Michael Best & Friedrich LLP and Levin Sedran & Berman LLP, asked the court to rule that ADM was in violation of the Sherman Act, Illinois antitrust and consumer fraud laws, Wisconsin’s interference and deceptive practices laws, and Iowas’ tortious interference law. They asked the court to require ADM to pay damages and be enjoined from participating in further anticompetitive activity.