2:20-cv-02212-CSB-EIL # 1 Page 1 of 30
`E-FILED
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` Thursday, 23 July, 2020 07:38:53 PM
` Clerk, U.S. District Court, ILCD
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF ILLINOIS
`URBANA DIVISION
`
`
`Midwest Renewable Energy, LLC,
`individually and on behalf of all others
`similarly situated,
`Plaintiff,
`v.
`ARCHER DANIELS MIDLAND
`COMPANY,
`Defendant.
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`JURY TRIAL DEMANDED
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`CLASS ACTION COMPLAINT
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`GLOSSARY
`ADM: Defendant Archer Daniels Midland Company.
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`Argo Terminal: The Kinder Morgan Argo terminal located in Argo, Illinois.
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`1.
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`2.
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`Trading at the Argo Terminal during the half-hour MOC window determines the Chicago
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`Benchmark Price that sets the value of Chicago Ethanol Derivatives. Trades at the Argo
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`Terminal also are used by OPIS in its reports of the daily Chicago OPIS Prices.
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`3.
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`Argo Prices: Prices of ethanol on transactions in ethanol made in the Argo
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`market. Argo Prices are used by OPIS in its reports of the daily Chicago OPIS prices, and are
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`used by Platts in the determination of the Chicago Benchmark Price.
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`4.
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`Chicago Benchmark Price: A daily price of ethanol traded at Argo Terminal. It
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`is determined by Platts based on ethanol trading during the MOC window. This price serves as
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`the basis for the value of the Chicago Ethanol Derivatives.
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`5.
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`Chicago Ethanol Derivatives: Ethanol futures contracts and options contracts
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`traded on the Chicago Mercantile Exchange (“CME”). The value of these instruments is
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`determined wholly or in part by the Chicago Benchmark Price. The most important derivatives
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`are (1) the Chicago Ethanol (Platts) Futures contract (CME symbol: CU) traded on NYMEX; (2)
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`the Chicago Ethanol (Platts) Average Price Option (CME symbol: CVR) traded on NYMEX;
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`and (3) the CME’s Ethanol Futures Contract (CME symbol: EH) traded on CBOT.
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`6.
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`Chicago OPIS Prices: Daily price assessments released by OPIS for ethanol spot
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`market trades at Argo. Specifically, assessments are for Denatured fuel-grade ethanol FOB Argo
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`terminal, 5,000 bbl, including RINs for the calendar year corresponding to the product delivery
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`date. Prompt assessments are 3-10 days from the published date.
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`7.
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`Class Period: The period, from November 1, 2017 until a date unknown to
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`Plaintiffs, but believed to be after September 4, 2019. This is the period during which ADM
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`2:20-cv-02212-CSB-EIL # 1 Page 3 of 30
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`allegedly acquired and maintained the market power to depress and had a depressant effect on
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`Argo prices, Chicago Benchmark Prices, Chicago OPIS prices, or Chicago Ethanol Derivative
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`Prices.
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`8.
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`First Level Sales: The first sales of ethanol made by the producer of that ethanol
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`to another person. Resales of ethanol after the first sale are excluded from the definition of First
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`Level Sales.
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`9.
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`First Level Sales Contracts: Contracts used by ethanol producers to make the
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`first sale of the ethanol they produce.
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`10.
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`First Level Sellers: The persons who produce ethanol and sell such ethanol to
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`another person.
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`11.
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`Formula Prices: In their First Level Sales Contracts for ethanol sold directly
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`from their plants, First Level Sellers frequently specify as the price term a formula which is
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`expressly based, in whole or in part, on a Chicago Benchmark Price, a Chicago Ethanol
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`Derivatives Price, or a Chicago OPIS Price. As used herein, Formula Prices are prices in First
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`Level Sales Contracts which are expressly based, in whole or in part, on a Chicago Benchmark
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`Price, a Chicago Ethanol Derivatives Price, or a Chicago OPIS Price.
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`12. Hitting the Bid: A phrase that describes a consummated trade where a seller
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`agrees to match a buyer’s posted bid quotation price. “Hitting the bid” is the opposite of “lifting
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`the offer,” where a buyer agrees to match a seller’s offer quotation for the product.
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`13.
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`ITT: Intertank Transfer (“ITT”) transactions are those occurring at the Argo
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`Terminal where ethanol is sold from storage tanks and deliverable at the Argo Terminal between
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`5 and 15 days forward from the date of sale. ITT transactions form the basis of the Chicago
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`Benchmark Price.
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`14.
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`Long Position: A long position is a trading position where a derivative
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`investment earns money for a trader if the price of the underlying commodity increases. A long
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`position contrasts with and is complementary to a short position where a trader earns money if
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`the price of the underlying commodity decreases.
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`15. MOC: The Market-on-Close (“MOC”) window is a 30-minute trading period for
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`ITT ethanol transactions between 1:00 p.m. and 1:30 p.m. C.T. every trading day at Argo
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`Terminal. Platts uses trading activity during the MOC to determine the daily Chicago Benchmark
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`Price for ethanol.
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`16. OPIS: Oil Price Information Service (“OPIS”). OPIS provides prices from Argo
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`in its Chicago OPIS Prices.
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`17.
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`Platts: S&P Global Platts (“Platts”) is a provider of trading information in the
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`ethanol market and other markets. Platts creates the daily Chicago Benchmark Price that
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`determines the value of Chicago Ethanol Derivatives.
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`18.
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`Short Position: A short position is a trading position where a derivative
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`investment earns money for a trader if the price of the underlying commodity decreases. A short
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`position contrasts with and is complementary to a long position where a trader earns money if the
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`price of the underlying commodity increases.
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`Plaintiff complains of Defendant based upon personal knowledge as to the allegations of
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`Plaintiff’s conduct, and information and belief as to all else.1
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`I.
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`SUMMARY OF ALLEGATIONS
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`1.
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`Plaintiff alleges that Defendant Archer Daniels Midland (“ADM”) engaged in
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`conduct which is similar to the alleged conduct in which ADM engaged, according to the
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`contentions made in the complaint and briefing submitted in AOT Holding AG v. Archer Daniels
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`Midland Co., 19-cv-02240, Dkt. 1 (“AOT Complaint”); see this Court’s Order in 19-cv-02240,
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`Dkt. 45 (denying in substantial part AMD’s motion to dismiss). For example, similar to the
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`conduct alleged herein, the AOT Holding AG plaintiff contended
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`-
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`“Instead of transporting its ethanol to other terminals to earn higher cost-adjusted
`revenues, or selling at higher prices in non-terminal private sales, ADM achieved a
`monopoly in MOC sales at lower cost-adjusted prices that it was simultaneously
`pushing down through its own selling activity.” See AOT Opposition to Motion to
`Dismiss, 19-cv-02240, Dkt. 20, p.8.
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`“Starting in November 2017, ADM suddenly flipped from being the predominant
`buyer of ethanol at Argo, to being the predominant seller when prices were lower,
`quickly achieving a monopoly (90%+) on sales during the MOC window.” Id.
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`“But the best evidence of ability to influence [ethanol prices] is that, almost
`overnight, ADM achieved a monopoly (90-95%) on sales during the benchmark-
`setting MOC window—a monopoly that it has maintained throughout the entire
`manipulation period.” Id. p.10.
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`- ADM’s “combination of reducing offer prices and hitting even lower-priced bids
`during the MOC window had the effect of driving Argo ethanol prices lower, both
`inside and outside the MOC window.” Id. p. 11.
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`2.
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`Although similar to the allegations and contentions in the AOT Holding action,
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`ADM’s conduct alleged herein is not identical. For example, the AOT Complaint seeks recovery
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`1 Plaintiff’s information is obtained from the investigation by counsel. This investigation includes
`information from publicly available materials. Such materials include, but are not limited to, certain
`portions of (i) the Complaint in AOT v. ADM (19-cv-02240, Dkt. 1), AOT’s Memorandum in Opposition
`to ADM’s Motion to Dismiss (19-cv-02240, Dkt. 20), and (ii) the Complaint in Green Plains v. ADM (20-
`cv-00279, Dkt. 1).
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`on behalf of traders in Chicago Ethanol Derivatives. But the Plaintiff here, the members of the
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`Class, and Defendant ADM all produce ethanol. They were competitors in the production and
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`First Level Sales of ethanol from their plants to buyers of ethanol. See Glossary ¶8.
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`3.
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`Plaintiff alleges that by depressing prices at Argo, ADM depressed the amounts of
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`revenues which Plaintiff and Class Members received for their First Level Sales of ethanol made
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`either at Argo or pursuant to First Level Sales Contracts expressly based, in whole or in part, on
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`a Formula Price, i.e., on a Chicago Benchmark Price, a Chicago Ethanol Derivatives Price, or a
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`Chicago OPIS Price. See Loeb Industries, Inc. v. Sumitomo Corp., 306 F.3d 469, 487-89 (7th Cir.
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`2002) (upholding against alleged manipulator of copper futures prices antitrust claims brought by
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`persons who purchased physical copper pursuant to contracts which incorporated the
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`manipulated futures contract price into the contract formula that determined the price of the
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`physical copper sold under the contract).
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`4.
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`Specifically, between November 1, 2017 and September 4, 2019, Defendant
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`ADM, in violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. Section 2 (“Sherman
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`Act”), intentionally acted uneconomically to divert and ship large supplies of ethanol into Argo,
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`flood Argo with ethanol supplies, and to aggressively reduce its offers and aggressively hit bids
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`in the Argo sales market. Through this and other uneconomic and unlawful conduct, ADM
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`acquired and maintained the market and monopoly power to depress prices in the Argo market
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`and to depress Formula Prices.
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`5.
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`ADM did not gain its large shares of deliveries of ethanol into Argo and sales of
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`ethanol at Argo, nor its power to depress prices at Argo, through superior skill, acumen, or
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`greater efficiency. On the contrary, ADM gained its large shares of deliveries and sales through
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`uneconomic, anticompetitive, and predatory conduct. ADM could engage in this anticompetitive
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`conduct only because such conduct unlawfully manipulated and depressed Chicago Ethanol
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`Derivatives prices. This produced illicit gains for ADM on its large short positions in Chicago
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`Ethanol Derivatives which compensated for and financed ADM’s market power-acquiring
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`uneconomic conduct at Argo.
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`6.
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`ADM’s Uneconomic, Manipulative, And Unlawful Behavior To Depress Argo
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`Prices. Prior to the Class Period, ADM was consistently a purchaser of ethanol in the Argo
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`market. But during the Class Period:
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`a. ADM dramatically shifted from buying at Argo to deliveries of ethanol into Argo.
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`b. Although ADM produced only 10% of the ethanol in the United States, ADM
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`became, during the Class Period, a large supplier and seller of ethanol at Argo.
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`For example, ADM made as much as 90% - 100% of the sales at Argo during the
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`Platts Market on Close (“MOC”) window. See Glossary ¶15.
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`7.
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`ADM Uneconomically Flooded The Argo Market With Ethanol In Order To
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`Inflate Ethanol Supplies At Argo. First, ADM repeatedly ignored and refused to sell ethanol at
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`the higher prices available in markets other than Argo. Instead, ADM uneconomically shipped
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`physical ethanol to Argo when the Argo prices were already lower than those in alternative
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`locations. Also, ADM continued to flood Argo with ethanol supplies even as prices fell and
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`ADM’s operating profits from its ethanol production evaporated.
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`8.
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`Important Determinants Of Prices Are Supply And Demand. The amount of
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`supply in a market is inversely related to price in the market. The amount of demand in a market
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`is directly related to the price in the market. That is, all other things equal, an increase in supply
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`depresses the price. And an increase in demand increases the price. By uneconomically diverting
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`ethanol to the Argo market and becoming a large supplier of ethanol at the margin in that market,
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`ADM acquired and maintained the power to depress and did depress prices of all purchases and
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`sales of ethanol at Argo whether made inside or outside the MOC window.
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`9.
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`(a) The reductions which ADM’s exercise of market power caused in the Argo
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`market, OPIS Chicago Prices, Chicago Benchmark Prices, and Chicago Ethanol Derivatives
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`Prices signaled to First Level Sellers, purchasers, and others transacting in ethanol that ethanol
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`prices should be lower. Such “price signal” effect tended also to reduce ethanol prices at fuel
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`terminals other than Argo.
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`(b) Nonetheless, as a direct result of ADM’s exercise of market power to depress prices at
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`Argo, the Argo prices were still less than the prices at other terminals by approximately 5-15
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`cents per gallon. AOT Complaint, ¶83.
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`10.
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`ADM Also Engaged In Uneconomic, Predatory, And Manipulative Sales
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`Conduct At Argo. In addition to flooding the Argo market with ethanol supplies, ADM
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`enhanced its market power at Argo by engaging in uneconomic and predatory sales behavior
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`there. ADM sold ethanol at Argo for (i) less than ADM could have received from readily
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`available alternatives elsewhere, (ii) less than ADM’s variable cost to produce or obtain the
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`ethanol, and (iii) less than the prices ADM could have achieved had it not engaged in the
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`following behavior. In selling ethanol at Argo, ADM aggressively “hit the bid” (See Glossary
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`¶12), hit multiple bids at once, made low priced offers, and made substantial volumes of sales
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`transactions during the compressed time period of the Platts MOC window. See Glossary ¶15
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`below.
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`11.
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`ADM’s Additional Means Of Acquiring And Maintaining Its Market Power
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`To Depress Prices At Argo. ADM’s means of acquiring and maintaining its market power to
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`depress prices at Argo, included ADM’s establishment of extremely large short positions in
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`Chicago Ethanol Derivatives on the CME. Argo’s prices were used in the determination by Platts
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`of the MOC price, and the MOC price was also used by the CME to determine the settlement and
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`other prices of Chicago Ethanol Derivative Prices. Therefore, if ADM could cause Argo prices to
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`decline, ADM could self-cause MOC prices and the prices of Chicago Ethanol Derivatives Prices
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`to decline. These decreases would produce substantial gains for ADM on the short position it
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`established in Chicago Ethanol Derivatives. These illicit gains from ADM’s own uneconomic,
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`predatory and other manipulative conduct financed and more than compensated for ADM’s
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`losses incurred in order to become a large supplier and a large seller at Argo.
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`12.
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`This additional means of ADM’s acquisition and maintenance of its market power
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`was anticompetitive and unlawful on multiple levels. It is a felony in violation of the Commodity
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`Exchange Act, 7 U.S.C. §1 et seq., (“CEA”) to manipulate Argo prices,2 and also a felony in
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`violation of the CEA to manipulate Chicago Ethanol Derivatives Prices.3 Like the antitrust laws,
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`the CEA seeks to encourage competitive conduct and prices. ADM’s unlawful conduct to
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`manipulate prices at Argo and prices of the Chicago Ethanol Derivatives further injured
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`competition in the relevant markets.
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`13.
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`ADM’s anticompetitive conduct raised a barrier to entry by other market
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`participants. This is because ADM’s means of acquiring market power at Argo were unlawful
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`and prohibited by the CEA and federal antitrust laws. Such legal bars constituted a barrier to
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`entry for market participants other than ADM.
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`14.
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`Antitrust Injury And Damages. Through the conduct alleged in this Complaint,
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`ADM did artificially depress each of the following: prices, bids and offers in the Argo market;
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`2 Section 9(a)(2) of the CEA, 7 U.S.C. § 13(a)(2) (prohibiting manipulation of the price of a “commodity”
`and ethanol is a commodity).
`3 Id. (prohibiting the manipulation of a commodity futures contract and option contract, and Chicago
`Ethanol Derivatives are commodity futures contracts and option contracts.).
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`the OPIS Chicago Prices; the Chicago Benchmark Prices; and Chicago Ethanol Derivatives
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`Prices. Plaintiff and Class Members made their First Level Sales at one or more of the depressed
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`prices and, therefore, received less for their ethanol than they would have received in the absence
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`of ADM’s unlawful conduct.
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`II.
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`JURISDICTION AND VENUE
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`This Court has subject matter jurisdiction over this action pursuant to Section 4 of
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`15.
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`the Clayton Act, 15 U.S.C. §15, and 28 U.S.C. §§ 1331 and 1337.
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`16.
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`This Court has personal jurisdiction over ADM pursuant to Section 12 of the
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`Clayton Act, 15 U.S.C. § 22. ADM transacts business, inhabits and is found in this District.
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`17.
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`Venue is proper in this District under Section 12 of the Clayton Act, 15 U.S.C.
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`§22. ADM inhabits, transacts business, and is found in this District.
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`18.
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`The activities of ADM were within the flow of, were intended to, and did have a
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`substantial effect on the interstate commerce of the United States, including in the markets for
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`financial derivatives based on ethanol and the market for ethanol itself.
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`19.
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`Filing this case in the Urbana Division of the Central District of Illinois is proper
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`because ADM’s manipulative activities in violation of the Sherman Act were conceived of and
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`directed from its North American headquarters in Decatur, Illinois, which is within Macon
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`County, Illinois and part of the Urbana Division pursuant to Local Rule 40.1 of this Court.
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`III.
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`PARTIES
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`20.
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`(a) Plaintiff Midwest Renewable Energy, LLC (“MRE”) is an ethanol producer
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`and First Level Seller. MRE produces and makes sales of approximately 26 million gallons of
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`fuel-grade ethanol each year at its ethanol plant located in Sutherland, Nebraska. During the
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`Class Period, MRE sold ethanol it produced at its Sutherland plant pursuant to multiple sales
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`contracts with price terms that incorporated the Chicago-OPIS price.
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`(b) For example, on or about November 30, 2017, MRE entered into a contract whereby
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`it agreed to sell a total of approximately 1,260,000 gallons of ethanol during the months of
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`January, February and March 2018 with approximately 420,000 gallons to be delivered each
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`month. The price term for this sales contract expressly was based, in part, on the average
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`Chicago-OPIS mean price for the week prior to delivery.
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`(c) ADM had obtained market power to reduce Argo and Chicago OPIS Prices prior to
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`and during January-March 2018. This includes, but is not limited to, ADM’s conduct specifically
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`alleged herein to have occurred on January 3, 2018 (¶81(a)), January 4, 2018 (¶81(b)), January 9,
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`2018 (¶81(c)), and January 12, 2018 (¶81(d)). ADM’s ongoing price-depressive conduct
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`proximately caused the depression of Chicago OPIS Prices at the times during January,
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`February, and March 2018 of MRE’s deliveries and sales of ethanol based on Chicago OPIS
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`Prices.
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`(d) As a result of ADM’s conduct alleged herein that resulted in artificially lower
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`Chicago OPIS Prices, MRE suffered antitrust injury and damages and incurred losses by
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`receiving less money for the ethanol it sold pursuant to its First Level Sales Contract.
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`21.
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`Defendant Archer Daniels Midland Company is a corporation organized, created,
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`and existing pursuant to the laws of the state of Delaware with its North American headquarters
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`at 4666 East Faries Parkway, Decatur, Illinois 62526, and global headquarters at 77 West
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`Wacker Drive, Chicago, Illinois 60601. All of ADM’s ethanol trading operations, including its
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`trading in Chicago Ethanol Derivatives, were directed from its North American headquarters in
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`Decatur, Illinois.
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`IV. RELEVANT MARKET
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`22.
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`The relevant defendant conduct market is the market for purchases and sales of
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`ethanol at Argo. The relevant product market is the market for First Level Sales of ethanol made
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`by ethanol producers (i) in the Argo market, or (ii) pursuant to First Level Sales Contracts in
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`which the price term is expressly based, in whole or in part, upon a Formula Price. The relevant
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`geographic market for this relevant product market consists of the United States, and includes
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`sales made from plants located in the United States, regardless of whether the purchaser of such
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`ethanol is a domestic or foreign purchaser and the delivery of ethanol sold by the producer is
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`made to a location within or outside of the United States.
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`23.
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`Alternatively, the relevant market consists of the sales of ethanol made at the
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`Argo Terminal Market. This relevant product market consists of ethanol sold in the Argo market.
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`This market consists of the geographic area for the Argo Terminal Market and for which Argo
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`prices are reported.
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`A. Ethanol
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`V.
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`UNDERLYING ALLEGATIONS
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`24.
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`25.
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`Ethanol is a renewable fuel made primarily from corn.
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`The current domestic ethanol market was largely created by federal law and state
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`regulations that set renewable fuel requirements for transportation fuel. In particular, the Energy
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`Independence and Security Act of 2007 set Renewable Fuel Standards that increased the volume
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`of renewable fuel blended into gasoline. While federal law sets targets for renewable fuels,
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`ethanol is a competitive alternative to gasoline and gasoline components all over the world.
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`26.
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`Renewable Fuel Standards require gasoline producers to buy a certain quantity of
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`renewable fuels (such as ethanol) each year to blend into gasoline used as transportation fuel.
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`Ethanol is the renewable fuel most used by obligated parties to meet this renewable fuel
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`requirement. Legal and regulatory requirements play a large role in the demand for ethanol by
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`creating a class of “ethanol consumers” consisting mostly of refineries, importers, blenders, and
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`general gasoline resellers.
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`27.
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`Buyers in the ethanol market can get their ethanol primarily in two ways. First,
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`they can buy ethanol directly from an ethanol producer, entering a First Level Sales Contract to
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`have the producer ship ethanol straight to the buyer’s facilities for blending with gasoline that is
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`then shipped to retail markets. Second, buyers can choose to purchase ethanol at terminals
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`located throughout the country, where ethanol producers ship and store quantities of ethanol via
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`railcar, tanker truck, or barge; if these purchases at the terminals from an ethanol producer
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`constitute the first sale by that producer of the ethanol it produced, then these contracts also
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`constitute First Level Sales Contracts. Ethanol stored at terminals is available for immediate, or
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`“spot,” sale to buyers. At these terminals, ethanol and gasoline can be blended onsite for ease of
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`shipment to retail end users; alternatively, buyers can transport the ethanol purchased at
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`terminals back to their own facilities or refineries for blending.
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`28.
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`Terminals also serve as locations where other buyers who do not blend ethanol for
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`end use can acquire and ship it for resale elsewhere at higher prices. If these buyers are
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`purchasing ethanol directly from an ethanol producer which is the first sale by that producer of
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`such ethanol, then these sales also constitute First Level Sales.
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`29.
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`“Rule 11” is a railroad term for switching lines at a set destination. When a railcar
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`is traded at Chicago Rule 11, it is handed off from one Class I railroad to another, where the
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`shipper pays freight from the plant to the Chicago interchange, and the buyer pays it from the
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`Chicago interchange beyond (to the destination). The Rule 11 seller will learn the ultimate end-
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`route destination when the buyer provides nominations, which occurs prior to creating a bill of
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`lading and releasing the loaded cars at origin to the railroad. Upon delivery of the Rule 11
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`contract, the seller will be notified when the cars are constructively placed at destination, then
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`released empty to the railroad. The time that the car returns to the plant is estimated based on its
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`past velocity. Actual title transfers at Chicago, when the rail line interchange occurs.
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`30.
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`The Rule 11 price is determined by an analysis of local plant values and
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`destination basis, plus freight from the plant to the Rule 11 interchange. Car cost and uncertainty
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`of delivery/end destination are not taken into account in pricing. In a normal market, to account
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`for the throughput, Rule 11 trades flat to a slight discount to ethanol trading out of the Argo
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`terminal. Throughput (Energy) 1) is a term used to describe the total volume of raw materials
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`that are processed by a plant such as an oil refinery in a given period, and 2) the total volume of
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`crude oil and refined products that are handled by a tank farm, pipeline, or terminal loading
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`facility.
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`31.
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`The Midwest is the epicenter of U.S. ethanol production, dwarfing every other
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`region. The U.S. Energy Information Administration reports that 176 of the 200 ethanol plants in
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`the U.S. (88 percent) are located in the Midwest, in a region defined as Petroleum Administration
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`for Defense District 2, or PADD 2.
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`32.
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`Ethanol mills in the Midwest also have higher capacities than plants elsewhere in
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`the U.S. As shown in the diagram below, of the country’s nearly 16.3-billion-gallon annual
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`production capacity, the Midwest region accounts for more than 14.8 billion gallons (91 percent)
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`of total production. Shipping ethanol out of the Midwest for sale in other regions is therefore a
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`routine part of the ethanol production business.
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`33.
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`ADM is one of the country’s largest producers of ethanol, operating eight mills (a
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`mix of dry and wet mills located in Nebraska, Iowa, Minnesota, and Illinois) capable of
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`producing a total of 1.69 billion gallons of ethanol, or approximately 10% of the U.S. annual
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`ethanol production of 16 billion gallons.
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`B. The Argo Terminal and the Price Assessments Based On Transactions At Argo.
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`34.
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`The Argo Terminal is a critical locus for the spot sale of ethanol, for price
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`discovery in the broader U.S. ethanol market, and for transporting ethanol domestically and
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`internationally to meet demand. Accordingly, Argo prices for ethanol influence and act as a price
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`beacon for the prices of ethanol sold at other terminals, as well as the prices that First Level
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`Sellers and other private parties negotiate in non-terminal ethanol sales contracts.
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`35.
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`The Argo Terminal is one of the largest of the approximately 1,200 ethanol
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`terminals in the country and the largest in the critical PADD 2 region. It can handle shipments by
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`rail, truck, and barge. Because of this multimodal capability and capacity, the Argo Terminal
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`serves all segments of ethanol purchasers, from blenders and other end users to resellers and
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`middlemen.
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`36.
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`In recognition of the key role Argo plays in the U.S. ethanol market, pricing
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`services such as Platts and OPIS provide daily assessments that reflect transaction prices, or bids
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`and offers for ethanol at Argo. OPIS reports a Chicago OPIS price on a daily basis that consists
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`of a “high” price and a “low” price at the Argo terminal. The OPIS mean or OPIS spot mean
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`represents the midpoint between the OPIS “high” price and OPIS “low” price. The OPIS high
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`price, the OPIS low price, and the OPIS mean are sometimes referred to as the Chicago high
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`price, the Chicago low price, and the Chicago mean. Ethanol producers, including Plaintiff, make
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`First Level Sales of the ethanol they produce pursuant to First Level Sales Contracts which
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`specify their price term in a formula which is expressly based, in whole or in part, on “OPIS
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`Mean”, “Chicago Mean”, OPIS high, OPIS low, Chicago high, or Chicago low prices. These
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`prices may be incorporated into a formula which averages the OPIS prices over the time window
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`for delivery of the ethanol sold or other periods. If the amount of deflation in the OPIS prices
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`resulting from ADM’s unlawful conduct is determined on a daily basis, it is a matter of mere
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`arithmetic computation to determine the amount of reduction in the sales revenues received
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`under such a price term.
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`37.
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`OPIS is recognized as a “widely accepted fuel price benchmark for supply
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`contracts and competitive positioning.” OPIS is relied on as a trusted benchmark because of its
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`published methodology and internal policies and practices.
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`38.
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`For OPIS, the Chicago price for ethanol benchmark is based upon pricing for the
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`following ethanol sales: “Denatured fuel-grade ethanol FOB Kinder Morgan Argo terminal,
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`5,000 bbl, including RINs for the calendar year corresponding to the product delivery date.
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`Prompt assessments are 3-10 days from the published date.”
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`39.
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`First Level Sellers, their customers, and other buyers and sellers of ethanol, sell
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`ethanol pursuant to contracts which use as the price term a formula that includes other price
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`assessments of the daily transactions or bids and offers at Argo. These include the Platts’
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`Chicago Ethanol (Terminal) price, referred to herein as the “Chicago Benchmark Price.” The
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`Chicago Benchmark Price is determined based upon the activity in the MOC window from 1:00
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`p.m. to 1:30 p.m. C.T. and is based on Intertank Transfer (“ITT”) transactions: ethanol sold from
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`storage tanks and deliverable at the Argo Terminal between 5 and 15 days forward from the date
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`of sale. The Platts assessment is important to many market participants, and all assessments in
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`Chicago become co-dependent on establishing value, as they are tightly correlated and represent
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`the same location and similar timing.
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`40. Market participants also use Platts and OPIS data to study market trends and
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`predict future movement in ethanol prices for purposes of strategic planning, including hedging
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`and speculation on Chicago Ethanol Derivatives.
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`41.
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`Before each day’s MOC window, ethanol buyers post bid prices and ethanol
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`sellers post offer prices. Under normal trading practices, buyers and sellers adjust their bids and
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`offers in response to the prices proposed by their potential counterparties—motivated sellers will
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`decrease their offers to beat the offers of competing sellers, while motivated buyers will increase
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`their bids to beat those of competing buyers. Once there is a match between a buyer bid and a
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`seller offer during the MOC, a sale is consummated.
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`42. When an ethanol seller agrees to sell ethanol at the posted bid price of a buyer,
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`this practice is known as “hitting the bid.” The buyer equivalent to hitting the bid is referred to as
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`“lifting the offer,” and occurs when an ethanol buyer agrees to pay the posted offer price quoted
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`by an ethanol seller.
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`43.
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`The negotiation of prices for sales of ethanol at Argo occur in the context of the
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`amount of supply of ethanol which is in or deliverable to the Argo terminal within the time
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`period of the date of sale.
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`C. Chicago Ethanol Derivatives Prices Are Tied To The Chicago Benchmark Price
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`44.
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`The Chicago Benchmark Price is also used to establish the value of and to