Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Energy company’s monopolization claims run out of steam, (Sep 28, 2015)

By Greg Hammond, J.D.

An oil and gas company’s conspiracy and monopolization claims were dismissed in an action alleging foreclosure of competition in the exploration for and production of natural gas from Colorado’s Rugged Mountain Area. In granting summary judgment against the antitrust claims, the federal district court in Denver determined that the oil and gas company failed to provide evidence demonstrating the defendants caused or were capable of causing injury to competition and failed to establish antitrust standing (Buccaneer Energy USA Inc. v. Gunnison Energy Corp., September 25, 2015, Matsch, R.).

Gunnison Energy Corp., SG Interests I, Ltd., and SG Interests VII, Ltd. co-owned a pipe-line system in Colorado’s Rugged Mountain Area. Oil and gas producer Buccaneer Energy USA, Inc. entered into a lease and purchase agreement for the exclusive sublease and operation of natural gas producing company Riviera Drilling & Exploration Co.’s assets. Riviera sold natural gas to Gunnison. After Buccaneer’s purchase, Gunnison allegedly made unreasonable demands for transporting gas from the Riviera leases. Buccaneer filed suit against Gunnison and SG, alleging that the defendants conspired in restraint of trade and to monopolize, injuring competition in the market for production of gas in Colorado’s Ragged Mountain Area and for the downstream sale of gas. The defendants moved for summary judgment.

Injury. The court first determined that the defendants’ conduct was not actionable under the Sherman Act. Buccaneer demonstrated that the defendants demanded unreasonable terms for access to the Ragged Mountain Pipeline with the intent to prevent Buccaneer from acquiring the Riviera leases, and consequently preventing Buccaneer from competing with the defendants in producing gas. The defendants’ conduct, however, did not affect the market for acquiring new leases, the court concluded. Further, acquiring the Riviera leases did not enable the defendants to suppress the value of those properties. Buccaneer therefore failed to establish injury to competition, as opposed to simply harm to Buccaneer.

Standing. Even if Buccaneer could establish injury to competition, the court found that the company failed to establish antitrust standing. Specifically, the court determined that the only conclusion that could be drawn from the evidence was that Buccaneer’s business plan for developing the Riviera assets was not viable when Gunnison rejected Buccaneer’s proposed terms for a transportation agreement and SG rebuffed a proposal to participate in the Bull Mountain Pipeline. Instead, the evidence demonstrated that Buccaneer was undercapitalized and it had no ability to fulfill its obligations under the Lease and Purchase Agreement or raise additional capital without completing various tasks it had barely begun or failed to complete on time. The motion for summary judgment was therefore granted.

The case number is 12-cv-01618-RPM.

Attorneys: Larry S. Pozner (Reilly Pozner, L.L.P) and Ronald L. Wilcox (Peters Mair Wilcox) for Buccaneer Energy USA Inc. Timothy R. Beyer (Bryan Cave LLP) for Gunnison Energy Corp. L. Poe Leggette (Baker & Hostetler, LLP) for SG Interests, I, Ltd. and SG Interests VII, Ltd.

Companies: Buccaneer Energy USA Inc.; Gunnison Energy Corp.; SG Interests, I, Ltd.; SG Interests VII, Ltd.

Cases: Antitrust ColoradoNews