Restraint of Trade: Does Manipulation of LIBOR Fall Within the Sherman Act’s Definition of Trade A Question of First Principles

Michael Eisenkraft, J. Douglas Richards, Nov 28, 2012

Defendants’ motions to dismiss the antitrust claims of the Plaintiffs in the LIBOR multi-district litigation includes an argument that advocates for a limitation on the coverage of Section 1 of the Sherman Act based on the assertion that LIBOR is not a traditional good traded in commerce. Defendants argue that the Sherman Act does not cover manipulation of U.S. LIBOR as this manipulation cannot constitute a restraint of trade because “LIBOR is just an index and not is itself a marketplace transaction.” Defendants’ motions to dismiss the antitrust claims of the Plaintiffs in the LIBOR multi-district litigation includes an argument that advocates for a limitation on the coverage of Section 1 of the Sherman Act based on the fact that LIBOR is not a traditional good traded in commerce. Defendants argue that the Sherman Act does not cover manipulation of U.S. LIBOR as this manipulation cannot constitute a restraint of trade because “LIBOR is just an index and not is itself a marketplace transaction.”…

From Plaintiffs’ perspective, Defendants’ arguments bear the usual indicia of an attempt to make new law-an absence of case citations supporting the core of an argument accompanied by rhetorical devices designed to indicate that the assertion they advocate is so simple and basic that common sense, as opposed to case law or other legal citations, is sufficient for them to prevail. From Defendants’ perspective, their argument’s lack of legal citations is a function of the novelty of Plaintiffs’ claims and not the novelty of their defense- according to Defendants, no court has ever had to rule on a claim precisely like this one because no plaintiff has ever brought an antitrust claim based on manipulation of an index that lies outside the marketplace and that is not attached to an underlying commodity.

Regardless of who is right-whether this is a novel defense, a novel claim, or both-what is relatively certain is that there is something here that merits comment, discussion, and study.

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• Restraint of Trade: Does Manipulation of LIBOR Fall Within the Sherman Act’s Definition of “Trade”? — A Question of First Principles