Ethanol Price-Fix Probed

U.S. trade regulators said Monday that they have turned over a price-fixing investigation of Archer Daniels Midland and other producers of the gasoline additive ethanol to the Department of Justice, in a sign the probe could turn into a criminal case.

“After reviewing these materials, staff of the FTC’s Bureau of Competition has transmitted them to the Antitrust Division of the Department of Justice,” Federal Trade Commission General Counsel William Kovacic wrote to Rep. Doug Ose (R-Sacramento), head of the House subcommittee on energy policy, natural resources and regulatory affairs.

Late last month, Ose revealed internal memos by ADM and other ethanol producers indicating collusion to set prices for alcohol originating from surplus European wine to mix with the additive.

During the April 23 hearing, Ose asked the FTC to investigate the allegations. After a review, the agency turned the probe over to the Department of Justice, a move Ose said implied illegal activity.

ADM, which produces 41% of the ethanol in the U.S., has long touted the benefits of ethanol as a boon to U.S. farmers and energy security because most of it is made from U.S.-grown corn.

However, the documents under review suggest that the company has been rigging bids to buy wine alcohol before turning it into ethanol.

In doing so, the company appears to have benefited from subsidies in Europe and the U.S., Ose said.

“It has to do with purchases of wine alcohol in the European Union eight or 10 years ago,” said ADM representative Larry Cunningham. “We are doing fact-finding at ADM to determine what the facts are.”