The opinion of the court was delivered by: Judge James B. Zagel
MEMORANDUM OPINION AND ORDER
There is little dispute regarding the facts in this case. As part of its Deferred Prosecution Agreement with the government,*fn1 Defendants BP America Inc. and BP Products North America, Inc. ("BP Defendants" or "Defendants") admitted that in February 2004, some of its traders manipulated the February 2004 TET propane market, propane stored in and shipped via the Texas Eastern Products Pipeline Company, LLC ("TEPPCO") pipeline system.*fn2 In order to artificially create a lack of supply and raise TET propane prices, BP traders, who trade in gas and power products including propane, purchased more TET propane for February 2004 delivery than BP needed. By doing so, BP traders believed they could force counterparties with short positions*fn3 to pay inflated prices to cover their delivery obligations at month's end. As part of the 36-day manipulation scheme, whatever remained would be sold at a small loss in March.*fn4 BP succeeded in inflating propane prices for 19 days, driving the cost per gallon up to 94 cents from an earlier February low of 61 cents; however, the scheme eventually failed, as many counterparties declined to purchase as anticipated.
Beginning February 26, prices began to drop. As a result of Defendants' conduct, "additional supplies of propane were directed away from the non-TET caverns," increasing supply to the TET cavern, and on March 1, the price plummeted to 61.75 cents per gallon, nearly 25 cents below the February 27 price. BP took a $10 million loss on the propane it sold in March. Plaintiffs, parties who purchased propane directly from producers, allege that as a result of this scheme, they suffered damages by paying artificially inflated prices. They seek restitution as well as damages under the Sherman Act, the Commodity Exchange Act ("CEA"), and common law and statutory fraud.*fn5 BP Defendants move to dismiss the complaint in its entirety. For the following reasons, Defendants' motion is granted in part and denied in part.
A Motion to Dismiss under Rule 12(b)(6) requires that I analyze the legal sufficiency of the complaint, and not the factual merits of the case. Autry v. Northwest Premium Servs., Inc., 144 F.3d 1037, 1039 (7th Cir.1998). I must take all facts alleged in Plaintiffs' complaint as true and draw all reasonable inferences from those facts in favor of Plaintiffs. Caldwell v. City of Elwood, 959 F.2d 670, 671 (7th Cir.1992). Plaintiffs, for their part, must do more than solely recite the elements for a violation; they must plead with sufficient particularity so that their right to relief is more than a mere conjecture. Bell Atl., Corp. v. Twombly, 550 U.S. 544, 555 (2007). Plaintiffs must plead their facts so that, when accepted as true, they show the plausibility of their claim for relief. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Plaintiffs must do more than plead facts that are "consistent with Defendants' liability" because that only shows the possibility, not the plausibility, of their entitlement to relief. Id. (internal quotations omitted).
Monopolization Claim Under § 2 of the Sherman Act
Section 2 of the Sherman Act imposes a penalty on persons who monopolize, attempt to monopolize or conspire to monopolize any part of interstate commerce. 15 U.S.C. § 2 (2004).
"The offense of monopoly under [§] 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power." U.S. v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). "Monopoly power has long been defined in the courts as the power to exclude competition or to control price[.]" Indiana Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1409, 1414 (7th Cir. 1989). Plaintiffs may prove market power either (1) "through direct evidence of anticompetitve effects," or (2) "by proving relevant product and geographic markets and by showing that the defendant's share exceeds whatever threshold is important for the practice in that case." Toys "R" Us, Inc. v. F.T.C., 221 F.3d 928, 937 (7th Cir. 2000). "The existence of such power ordinarily may be inferred from the predominant share of the market." Grinnell, 384 U.S. at 571.
Plaintiffs argue that they have adequately pleaded market power under either rubric. First, they claim that the direct evidence in this case proves that BP had market power. By the end of February, BP owned 88% of all of that month's propane inventory in the TEPPCO system and held a position of over 5.1 million barrels. On February 24, there were no offers on Chalkboard*fn6 to sell February 2004 TET propane in volumes greater than 10,000 barrels other than offers made by Defendants themselves at non-competitively set inflated prices. (This was done to suggest that TET propane was available, but also in an attempt to ensure that no one would buy). By February 27, BP was the primary seller of February 2004 TET propane, and BP employees dictated the price of this propane as they released it for sale to shorts who needed it to cover their contractual obligations.
Plaintiffs also claim that the circumstantial evidence in this case proves that BP had market power, again citing the 88% market share held by BP in February 2004. See MCI Comm. Corp. v. American Tel. and Tel. Co., 708 F.2d 1081, 1107 (7th Cir. 1983) ("Where the data reveals a market share of more than seventy to eighty percent, the courts have inferred the existence of monopoly power."). Plaintiffs contend that barriers to entry were high in that other pipelines could not have transported propane to the TET market due to physical limitations; refineries could only supply a small amount of propane; and overseas imports took several weeks to arrive.
Defendants argue that Plaintiffs have failed to allege "lasting structural change" and durable market power, both of which they maintain are necessary to state a claim for monopolization. Defendants first assert that monopolization requires an alteration of market structure. See, e.g., Apex Oil Co. v. DiMauro, 713 F. Supp. 587, 600 (S.D.N.Y 1989) ("Section 2 [ ] is aimed primarily not at improper conduct but at a pernicious market structure in which the concentration of power saps the salubrious influence of competition."). Defendants further assert that monopolization requires durability, citing several cases in support,*fn7 including Colorado Interstate Gas Co. v. Natural Gas Pipeline Co. of America, where the Court noted that
Although most courts do not explicitly discuss the persistence of a firm's ability to charge supracompetitive prices as a measure of a firm's market power, courts indirectly consider the potential longevity of supracompetitive pricing whenever they use market share to evaluate the degree of market power... The durability of a firm's ability to charge supracompetitive prices also underlies another factor used to evaluate the degree of market power [barriers to entry]... Only when an alleged monopolist faces substantial competition from a known competitor who will enter the market in a definite period of time, ought courts to decline to find sufficient market power to satisfy the requirement for the monopolization offense. 885 F.2d 683, 696 n.21. and n.23 (10th Cir. 1989). In this case, BP traders ...