Dive Brief:
- The U.S. Commodity Futures Trading Commission (CFTC) aims to block Kraft Foods Group's appeal to dismiss two counts from the CFTC's lawsuit, which claims Kraft allegedly manipulated wheat market futures.
- Kraft and its spinoff Mondelez have introduced two questions for an interlocutory appeal of the rejection of Kraft's motion for dismissal handed down in December. But the CFTC said those questions mischaracterize the allegations and are not appropriate grounds for an interlocutory appeal.
- Kraft has asked the court to stay the case so the Seventh Circuit could consider two questions: "whether a large futures purchase can amount to 'false signaling' market manipulation, and whether converging cash and futures prices can be considered 'artificial,'" Law360 reported.
Dive Insight:
The CFTC also to asked the judge "to 'streamline' the case by throwing out four of Kraft’s affirmative defenses, including that the agency failed to state a claim, that the court lacks jurisdiction and that the CFTC has unclean hands," according to Law360.
When the CFTC originally filed this lawsuit last April, Kraft wasn't phased by the ordeal, saying that Mondelez would likely take the brunt of the charges because the alleged incident happened before Mondelez had spun off from Kraft. At that time, Mondelez said that any fine or settlement agreement wouldn't significantly impact its shareholders. However, when U.S. District Judge John Robert Blakey denied Kraft's motion for dismissal and allowed the CFTC's case to proceed, he pointed out that Kraft was at the helm "during the relevant time period."
In its lawsuit, the CFTC has accused Kraft of illegally driving down wheat prices back in 2011 by purchasing a larger number of wheat futures contracts than the company was able to use, which led to a $5.4 million profit. Kraft supporters believe the CFTC is singling out the company for activities that all traders do. In its motion for dismissal, Kraft argued that the company was merely seeking the best price for wheat amid "difficult market conditions," primarily a decreasing supply and high prices.