BP, Shell and Statoil have been barraged by suits since acknowledging that they were among the companies hit in a surprise raid launched by the European Commission and the Norwegian Competition Authority in May. This action arises from Defendants’ unlawful combination, agreement, and conspiracy to fix and restrain trade in, and intentional manipulation of, North Sea Brent Crude Oil (“Brent Crude oil”) and the prices of Brent Crude oil futures contracts traded on the New York Mercantile Exchange…
By Gavin Broady
Law360, New York (July 02, 2013, 7:54 PM ET) — An Illinois private placement fund mounted a putative class action against BP PLC, Royal Dutch Shell PLC and Statoil ASA in New York Monday over the alleged crude oil futures manipulation scheme that put the companies in the crosshairs of a recent European regulatory sting.
White Oaks Fund LP is suing the energy companies over a purported plot to manipulate the price of North Sea Brent crude oil and Brent crude oil futures contracts by providing bogus pricing information to Platts, which publishes benchmark price assessments in the energy sector.
BP, Shell and Statoil have been barraged by suits since acknowledging that they were among the companies hit in a surprise raid launched by the European Commission and the Norwegian Competition Authority in May.
ACCESS TO COMPLETE ARTICLE (SUBJECT TO TRIAL SUBSCRIPTION)
EXTRACTS FROM COMPLAINT
1. This action arises from Defendants’ unlawful combination, agreement, and conspiracy to fix and restrain trade in, and intentional manipulation of, North Sea Brent Crude Oil (“Brent Crude oil”) and the prices of Brent Crude oil futures contracts traded on the New York Mercantile Exchange (“NYMEX”) and the Intercontinental Exchange (“ICE”) during the period of at least 2002 through the present (the “Class Period”), in violation of the Commodity Exchange Act (“CEA”), as amended 7 U.S.c. Â§ 1, et seq. (the “CEA”), the Sherman Act, 15 u.s.c Â§ 1, and common law.
2. Defendants deliberately reported inaccurate, misleading, and false information regarding Brent Crude oil prices to Platts. Platts is a unit of McGraw Hill Financial Inc. and the leading global provider of spot and contract pricing for the physical and financially settled derivatives Brent Crude oil markets. Platts’ Brent Crude oil prices are used to price and settle physical floating Brent Crude oil deals under long-term contracts on a physical (“spot”) basis, and to settle Brent Crude oil derivatives contracts, including NYMEX and ICE Brent Crude oil futures contracts. False reporting of Brent Crude oil prices to Platts undermines the entire pricing structure for the Brent Crude oil market.
3. Defendants are major producers and market participants in the Brent Crude oil market. As contributors of Brent Crude oil prices to Platts, Defendants had and continue to have market power and the ability to influence prices in the Brent Crude oil market. By purposefully reporting inaccurate, misleading, and false Brent Crude oil trade information to Platts, Defendants manipulated and restrained trade in both the spot Brent Crude oil market and the Brent Crude oil futures market.
4. On May 14, 2013 the European Commission (“EC”) confirmed that it, along with the EFTA Surveillance Authority, had carried out unannounced inspections of several companies acting in and providing services to the crude oil, refined oil products, and biofuels sectors. The EC undertook the inspections on concerns that (i) the companies may have colluded in reporting distorted prices to a Price Reporting Agency (“PRA”) to manipulate the published prices ‘for a number of oil and biofuel products; and (ii) the companies may have prevented others from participating in the price assessment process, to distort published prices. As described by the EC,
The prices assessed and published by the Price Reporting Agencies serve as benchmarks for trade in the physical and financial derivative markets for a number of commodity products in Europe and globally. Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming financial consumers.
5. Defendants BP plc, Royal Dutch Shell pIc, and Statoil ASA have each confirmed they are the subject of the EC investigation. In particular, Defendant Statoil confirmed that at the request of the EC, its office in Stavanger, Norway was subject to an inspection by the EFTA Surveillance Authority, assisted by the Norwegian Competition Authority. Further, Statoil confirmed that the scope of the EC’s investigation extends back to 2002. On May 17, 2013, United State Senate called for the U.S. Department of Justice to join the EC investigation.
6. Also on May 17, 2013, the U.K. Serious Fraud Office announced that it was “urgently reviewing” the EC’s allegations of price-fixing in the oil markets and determining whether to accept the case for “criminal investigation.”
7. Then, on June 24, 2013, it was reported that the Federal Trade Commission “(“FTC”) opened a formal investigation into how prices of crude oil and petroleum derived products are set. The FfC investigation is said to have mirrored the EC inquiry into the pricing practices of energy markets.
8. The foregoing investigations are expected to yield information from Defendants’ internal records (e.g., instant messages, e-mails, telephone records, Brent Crude oil trading data, etc.) that provide further support for Plaintiff’s claims. Plaintiff believes further evidentiary support for the allegations will be unearthed after a reasonable opportunity for discovery.
AGENTS AND UNNAMED CO-CONSPIRATORS
21. Various other entities and individuals, including, but not limited to, subsidiaries and/or affiliates of the Defendants participated as co-conspirators and manipulators in the acts complained of and performed acts and made statements that aided and abetted and furthered the unlawful conduct as alleged herein. The unnamed co-conspirators, along with the above-named Defendants, performed, participated in, furthered, and/or combined, conspired, or agreed with others to perform the unlawful acts alleged herein, including the restraint of trade, fixing, and manipulation of the prices of Brent Crude oil and Brent Crude oil futures contracts.