The New York Mercantile Exchange (Nymex) claimed a legal victory last week after a court dismissed antitrust charges by the Intercontinental Exchange regarding the use of Nymex settlement prices in ICE clearing procedures. But ICE also found something to like in the court decision, which left the key issues for the Commodity Futures Trading Commission (CFTC) to decide.
Nymex sued ICE, its chief rival in the energy markets, in November 2002 for copyright infringement related to its use of Nymex natural gas and crude oil futures settlement prices in the ICE clearing process.
ICE then countersued in January 2003, charging Nymex with abuse of monopoly power for claiming copyright protection over publicly available settlement prices and for efforts to launch an own over-the-counter (OTC) trading platform similar to the one Atlanta-based ICE operates. ICE also owns the London-based International Petroleum Exchange.
ICE said Nymex was trying to eliminate competition by “denying ICE, and only ICE,” access to its settlement prices “while encouraging the balance of the market to rely upon them.”
On Tuesday, Judge John G. Koeltl of the U.S. District Court for the Southern District of New York dismissed ICE’s three antitrust-based lawsuit counterclaims against Nymex because they failed to meet certain conditions set forth in antitrust cases decided by the Supreme Court. The Supreme Court earlier this year ruled in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko LLP that such claims “be denied where a state or federal agency has effective power to compel sharing and regulate its scope and terms.”
As a result, Koeltl said that “given the CFTC’s authority to regulate the scope and terms of access to Nymex settlement prices, ICE cannot make out a claim under the essential facilities doctrine” of antitrust law… “Furthermore, the CFTC is in a better position than a general antitrust court to determine the scope and terms of any forced sharing of settlement prices among the exchanges that it regulates and then to oversee and enforce any such sharing of settlement prices.”
In a statement on Thursday, Nymex Chairman Mitchell Steinhause lauded the court’s decision, saying “We are gratified that the court supported our position that these claims were without merit and look forward to vindication on the issue of copyright infringement.
“The effort and judgment that has gone into establishing our settlement procedures and continues to go into settling our markets each day should not be used by exchange-like organizations to take advantage of our efforts to compete with us,” Steinhause added.
Not so fast, ICE responded. “Contrary to the statements made by Nymex in its press release, the court did not rule on the central issue of the case — whether ICE is entitled to use the settlement prices — only [determined] the proper venue for certain claims to be heard,” said ICE CEO Jeffrey Sprecher.
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