UPDATE 1-U.S. judge dismisses aluminum price-fixing litigation

Fri Aug 29, 2014 7:00pm EDT

(Adds details from decision, plaintiffs, comments, byline)

By Jonathan Stempel

NEW YORK Aug 29 (Reuters) - A U.S. judge on Friday dismissed nationwide antitrust litigation accusing banks and commodity companies of conspiring to drive up aluminum prices by reducing supply.

The plaintiffs had accused Goldman Sachs Group Inc, JPMorgan Chase & Co, the large mining company Glencore Plc, and various commodity trading, metals mining and metals warehousing companies of having colluded since May 2009 to manipulate prices by hoarding inventory.

According to the plaintiffs, this caused delays of up to 16 months to fill orders, leading to higher storage costs at warehouses, many in the Detroit area.

They said the inflated aluminum prices, which are based on part on those storage costs, made it more costly to make cabinets, flashlights, strollers and swimming pool enclosures.

In an 85-page decision, U.S. District Judge Katherine Forrest in Manhattan said there was no showing that the defendants intended to manipulate prices, though it was clear that their actions affected the aluminum marketplace.

"As cast in the complaints, this was an unintended consequence of rational profit maximizing behavior rather than the product of conspiratorial design," she wrote.

U.S. regulators including the Department of Justice and Commodity Futures Trading Commission last year began looking into allegations of manipulation, amid complaints about long wait times and inflated aluminum prices by such companies as Coca-Cola Co and MillerCoors LLC.

Forrest has overseen 26 aluminum price-fixing lawsuits that were combined before her last December.

"Plaintiffs pretty much today have to have smoking gun evidence of a conspiracy or they cannot go ahead and try to prove that there was a conspiracy," said Robert Lande, a University of Baltimore professor specializing in antitrust law.

Christopher Lovell, a lawyer for many of the plaintiffs, did not immediately respond to requests for comment.

BANKS WELCOME DECISION

The judge said two groups of plaintiffs, commercial end users and consumer end users, lacked antitrust standing and could not bring their cases again.

Other plaintiffs were allowed to replead their cases.

These included "first-level" purchasers who buy aluminum for such things as bottled beverages and cabinets, and whose contract prices incorporated the storage costs.

They also included Mag Instrument Inc, which makes flashlights, and Agfa Corp, which makes lithographic plates for the newspaper and graphics industries.

Christopher Burke, a lawyer for Mag and Agfa, said his clients plan to replead their cases.

Among the warehouse defendants were Goldman's Metro International unit, Glencore's Pacorini Metals unit and JPMorgan's Henry Bath unit.

Goldman spokesman Michael DuVally and JPMorgan spokesman Brian Marchiony said their banks are pleased with the decision. Glencore did not immediately respond to a request for comment.

Forrest had on Tuesday dismissed the London Metal Exchange Ltd, now owned by Hong Kong Exchanges and Clearing Ltd , as a defendant.

The case is In re: Aluminum Warehousing Antitrust Litigation, U.S. District Court, Southern District of New York, No. 13-md-02481. (Reporting by Jonathan Stempel in New York; Additional reporting by David Ingram and Josephine Mason in New York, and Neha Dimri in Bangalore; Editing by Lisa Shumaker)

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