June 10, 2013 (TSR) – Two weeks after European anti-trust authorities began an investigation into three of the world’s biggest oil companies on suspicion of price fixing, a commodities firm in Chicago has filed suit against the companies.
The lawsuit brought by Prime International Trading, which trades crude oil, accuses BP, Royal Dutch Shell and Statoil of colluding to fix oil prices.
In the class action, which was filed in New York, Prime International is claiming damages based on the accusation that the oil companies intentionally manipulated and conspired to fix the price of Brent Crude oil, the global benchmark. It also accuses the companies of conspiring to fix the price of future contracts.
Legal documents filed state, “By purposefully reporting inaccurate, misleading and false Brent Crude oil trade information to Platts, defendants manipulated and restrained trade in both the physical (spot) Brent Crude oil market and the Brent Crude oil futures market,” according to the Financial Times. Information obtained from Platts is used to price contracts in Brent Crude. Platts publishes benchmark prices, which are used to determine how much refiners pay for crude and distributors pay for gasoline and diesel.
Because the reporting system to Platts used by oil traders lacks the transparency of a public exchange, there is greater opportunity for price fixing among the oil companies. The London offices of Platts were reportedly subject to “unannounced inspections” by authorities, as well as those of the three oil companies named in the lawsuit.
As many as fifty other defendants who have participated in the alleged price manipulation could be named in the lawsuit,
The Commission, the executive arm of the European Union, stated that it had concerns that the oil companies may have colluded in reported “distorted prices,” saying that “Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels,” all of which could potentially be harmful to consumers.