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Critics have long accused the potash industry of operating like a cartel to keep prices...
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Monday, July 2, 2012, 5:30 PM ETCritics have long accused the potash industry of operating like a cartel to keep prices artificially high. They're now closer to having their day in court, as a U.S. Court of Appeals rules an antitrust suit against potash producers can proceed - likely to play out over a long time, with no one sure where it will go. POT, AGU and MOS could face total damages of $2B-$6.5B if they lose.
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Mike, sounds pretty much like the description of OPEC. Your line about "companies that operate here" is bogus. Their product is sold here, but so is OPEC's product. What we need is the Muslim Brotherhood to take over Canada, then Obama and Holder would drop this witchhunt and start sucking up to the Canadians.
And its not a witchhunt, Canopotex is pretty close to, if not definitely, a cartel.
And the article says fines could be in the $2.5-$6 billion dollar range. That's enough to do some damage to shareholders, if it turns out to be true.
Name another cartel that a US listed company participates in, and the US government does not prosecute. This will prove your point that this is just "a political witchhunt on the part of the Obama administration".
Here are two articles about other price fixers who have been fined in the US, the airlines and TV makers:
http://huff.to/LQFs2N
http://reut.rs/P90q4w
And the Spring 2011 update from the DOJ listing price fixing settlements and fines
http://1.usa.gov/LQFtnn
The reality is enforcing sanctions against the OPEC countries would be easier than any attempt to enforce sanctions against Canada, Russia, and Belarus. Together they account for about 85% of world potash production and 80% of world reserves. Their share of annual potash production is far greater than OPEC has in the world oil market. Obama can squawk all he wants, but Canada, Russia, and Belarus are going to tell him to go pound sand. They have no motivation to do his bidding. If you had paid any attention to BHP's attempt to buy POT, you'd know that Canada views their potash resource as a strategic national asset and they're not going to give it away just because Obama does some whining. If Obama is foolish enough to cut US farmers off from the world's potash supply it's his neck that's in the noose. So in the end Obama's little witchhunt is going nowhere.
P.s. AGU and POT are Canadian not US companies. Of all the companies involved (and you appear completely unaware that there are Belarus/Russian companies involved as well), only MOS is a US company. However Mosaic's potash production is from Canada, and goes through Canpotex, so you're still dealing with a Canadian company, and any attempt to screw with it will meet stiff resistance from the Saskatchewan/Canadian govts.
Attempting to revive this suit is a joke. It is based on no evidence other than a multi-fold increase in Potash prices from 2003 to 2008. The reason it's a joke is such a standard could be applied to many commodity markets during that period (oil, nat gas, iron ore, coal, copper, etc. all saw like rises) so one is arguing that all these commodity markets were run by cartels, which begs the question, why only focus on this commodity market? Simply looking at price is an absurd standard, and selecting but one commodity market to attack is unethical at best. It also completely ignores the fact that potash has come down from it's 2008 highs, so one has to argue that somehow the cartel was disbanded and no longer exists. It's also claimed that the potash producers restricted supply, but a simple examination of world potash production and capacity utilization shows that to be false. Potash production and capacity utilization grew significantly during that period over the prior six year period. The problem is demand grew even faster with the obvious result that the price rose. Something which occurred in many commodity markets during that time and familiarity with econ 101 would have predicted.
http://on.doi.gov/Nq2Lmt
The below slide adds capacity utilization, which spiked during the period and was pegged at 100% during most of the period. Note that bringing on new greenfield capacity takes at least 5 or more years in the industry.
http://bit.ly/Nq2Jel
None of this supports the DOJ claim that supply restrictions rather than demand growth is to blame for the price rise during the period.
Agrium has retail locations all across the Great Plains/ Corn Belt in the US. http://bit.ly/NEeOuk
How about looking at AGU, POT, or MOS in the last week. They don't seem to have cratered for fear that this revived suit is going anywhere.
The suit has no merit, is based on claims that are contrary to the facts, has already been dismissed once, and is a politically motivated election-year hatchet attack that won't land.
Put any Oil & Service Station owner on the list, facts don't lie! So obvious, talk about looking the other way? Funny the USA Gov. should give each returning Vet. a 50% off gas card for serving in Iraq.
Price fixing at the highest level, way above the common mans understanding. "Peak oil" Haaa! Peak Prices maybe.
If you are referring to the international price of oil, we have already agreed OPEC is a cartel.
Maybe our Gov. should spend more time putting a real energy plan together vs. pushing around business or should I say shaking them down. I'm old, cynical, and fed up with our do nothing senate and house members, I just bet Canopotex did not stimulate coffers for re-elections enough. Yes old and bitter.... and the fake war the last administration gave us or should I say the WMD lie, gave us 4.00+ gas prices, collusion ha, you bet it was. The biggest cartel sits in Washington Mr. Maher!