Goldman Sachs on Monday denied accusations in a lawsuit filed by US-based Superior Extrusions that the investment bank and the London Metal Exchange violated US antitrust law by restraining aluminum supplies and driving up the metal's price.
Superior last week filed the suit with the US District Court for the Eastern District of Michigan on its behalf "and on behalf of others similarly situated." The suit contends LME and Goldman are engaging in anti-competitive and monopolistic behavior in the warehousing market in connection with the LME aluminum prices.
"We believe this suit is without merit and plan to vigorously contest it," Goldman spokeswoman Tiffany Galvin said in a statement. "We would also note that aluminum prices are down 40% from their peak in 2006."
LME issued a similar denial on Sunday.
Superior said in the suit that the US produces about 5.5 million tons of aluminum annually and annual net imports total about 500,000 tons.
The defendants, Superior charged, "have restrained in Detroit three times the annual net imports of aluminum and 27%-plus of the entire annual production of aluminum. These extraordinary changes, at the margin, in the available supply of aluminum caused by defendants, have greatly inflated aluminum prices."
Goldman in February 2010 acquired Metro International Trade Services, a Romulus, Michigan-based company also named in the Superior complaint. In the Detroit area, Metro operates 34 of 39 storage facilities licensed by the LME. Goldman in June said it is not involved in the day-to-day management of Metro.
Superior said in the suit there have been "repeated and ongoing public complaints since early 2011 that defendants were inflating aluminum prices. Despite these complaints, defendants intentionally continued, in order to profit themselves, to perform their agreements and engage in their conduct to restrain aluminum supplies and inflate aluminum prices."
Based upon these repeated complaints and other information, LME and Goldman "had complete knowledge that they were inflating aluminum prices and injuring persons who paid those prices, especially the Platts MW Premium and Midwest Premium price," Superior added.
Goldman last week said no client had accepted its offer to swap metal held in the queues for immediately available aluminum.
Superior accused Goldman of taking the step it had earlier refused to in response to increasing US government scrutiny.
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