Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Michigan files charges against energy firms for price fixing of oil and gas leases, (Mar 6, 2014)
Organizations Mentioned:Chesapeake Energy Corp. | Chesapeake Energy Corporation | Encana Oil and Gas USA
By Linda O’Brien, J.D., LL.M.
Michigan Attorney General Bill Schuette has announced the filing of criminal charges by his Corporate Oversight Division against Oklahoma-based Chesapeake Energy Corporation and Delaware-based Encana Oil and Gas USA for their alleged collaboration in 2010 to avoid bidding against each other in Michigan public auctions and private negotiations for oil and gas leases that caused prices to drop dramatically.
Public auctions of state-held oil and gas leases are held twice yearly, once in May and once in October, by the Michigan Department of Natural Resources (DNR). During the DNR’s May 2010 auction, both Chesapeake and Encana purchased natural gas leases in Michigan. In 2012, a news agency uncovered a possible conspiracy between the two companies’ executives who discussed an agreement following the May 2010 auction to allocate Michigan counties where each company would be an exclusive bidder for both public and private leases.
In the five month period following the state’s May 2010 auction, the alleged conspiracy may have been a key driver behind the state-held lease price in Michigan going from $1,510 per acre in May 2010 to less than $40 an acre at the October 2010 auction.
Schuette filed the following charges against Chesapeake Energy Corporation and Encana Oil and Gas USA on March 5, 2014: (1) one count each of antitrust violations relating to a contract or conspiracy in restraint of commerce, a high court misdemeanor punishable by up to two years and/or $10,000 fine for an individual or up to $1,000,000 for a corporation; and (2) one count each of attempted antitrust violations, a misdemeanor punishable by up to one year and/or $1,000 fine. Representatives from both Chesapeake and Encana are scheduled to be arraigned on March 19, 2014 before Cheboygan County’s 89th District Court.
“I will aggressively prosecute any company who conspires to break the law,” said Attorrney General Schuette.
Companies: Chesapeake Energy Corporation; Encana Oil and Gas USA
News: Antitrust MichiganNews