Antitrust Law Daily Wrap Up, ANTITRUST—Mich. Cir. Ct.: Encana resolves Michigan bid rigging case, but Chesapeake Energy continues fight, (May 6, 2014)

By Jeffrey May, J.D.

Michigan Attorney General Bill Schuette announced yesterday that Encana Oil & Gas USA, Inc. has agreed to pay $5 million to the state to end a civil antitrust suit brought by the attorney general's office. The state alleged that Encana conspired with Chesapeake Energy Corporation to avoid bidding wars against each other in Michigan public auctions and private negotiations for oil and gas leases. Executives at the two companies allegedly discussed an agreement following a May 2010 auction to split up Michigan counties where each company would be an exclusive bidder for both public and private leases. The settlement was approved by the Michigan Circuit Court on May 5 (State of Michigan v. Encana Corp., May 5, 2014, Canady, C.).

Terms of civil settlement. Under the terms of the civil settlement, Encana will pay $5 million, with $2.5 million going to funds managed by the Department of Natural Resources and the remaining $2.5 million going to fund the state's antitrust enforcement activities. In addition, Encana will enter into a four-year Corporate Integrity Agreement with the state, providing increased transparency of future oil and gas lease bidding activity.

Criminal charges. In addition to the civil settlement, Encana tendered a plea of no contest to the second count of a criminal complaint for attempted antitrust violations. The state agreed to dismiss the first count of the criminal complaint (contract or conspiracy in restraint of commerce)—the more serious charge— and not to bring any further charges against Encana arising out of the alleged bid rigging conduct.

The plea was filed in Cheboygan County’s 89th District Court and was taken under advisement. If Encana abides by the terms of the plea agreement, the criminal case will be dismissed after 11 months. In May, at the same time the criminal charges were filed against Encana, charges also were filed against Chesapeake.

Ongoing case against Chesapeake. The case against Chesapeake Energy remains ongoing in the district court, according to the attorney general's office. A preliminary examination that began yesterday was expected to run through May 8. Following the exam, the judge will determine whether there is enough evidence to proceed to trial.

“Chesapeake Energy is entitled to a trial, and we are moving forward with our case in Cheboygan District Court,” said Schuette.

The circuit court case is No. 14-554.

Attorneys: D.J. Pascoe for State of Michigan. Robert Wierenga (Schiff Hardin LLP) for Encana Oil & Gas USA, Inc.

Companies: Chesapeake Energy Corp.; Encana Oil & Gas USA, Inc.

Cases: Antitrust MichiganNews