(Fixes typo in second paragraph)
Cheboygan, Michigan May 5 Natural gas giant
Encana Corp has agreed to pay Michigan $5
million in a settlement that could clear the company of criminal
antitrust charges stemming from its role in a 2010 land leasing
Chesapeake Energy Corp vowed at a Monday hearing to
fight its own criminal antitrust charges. Michigan's attorney
general alleges that Chesapeake conspired with Encana to keep
land lease prices artificially low in the state.
At a probable cause hearing in a state court in Cheboygan,
Encana pleaded no contest to a state charge it attempted to
commit antitrust violations during a land leasing spree in 2010
in which it and Chesapeake were the biggest lease buyers. Both
companies faced criminal charges of antitrust violations and
attempted antitrust violations.
The court took Encana's plea under advisement and agreed it
would dismiss charges against the driller if it fulfilled terms
of a civil settlement over the next 11 months, Encana spokesman
Jay Averill said in an emailed statement.
As part of Encana's settlement, the company also agreed to
cooperate with prosecutors in Michigan who are still pursuing a
criminal case against Oklahoma-based Chesapeake, which they
allege was Encana's co-conspirator during the leasing spree.
During opening remarks, Heather Tewksbury, an attorney
representing Chesapeake, described Michigan Attorney General
Bill Schuette's allegations of antitrust violations against her
client as "smoke. Smoke with no fire." Tewksbury, a former U.S.
Department of Justice antitrust lawyer, added, "there was no
agreement in this case."
Encana's civil settlement with Michigan, and Chesapeake's
pledge to defend the charges, came after both companies
conducted internal investigations they said showed no collusion
between the firms.
A series of emails and communications between executives of
the companies that were competing for land leases in Michigan's
Collingwood Shale area during the speculative boom in 2010
showed they had discussed bidding strategies to acquire leases,
Reuters reported in 2012.
The companies said earlier they discussed forming a joint
venture in Michigan in 2010, but never reached any agreement.
Both Chesapeake and Encana recently received letters from
the Justice Department, informing them a separate U.S. probe
into whether they violated antitrust laws in Michigan had
The DOJ was still pursuing an investigation into potentially
anti-competitive behavior in oil and gas leasing in other
A "substantial portion" of Encana's $5 million payment to
Michigan will go to the Department of Natural Resources State
Park Endowment Fund, Encana said in a statement. The payment
comes "in exchange for a release of the state's civil claims,"
Michigan has alleged Encana and Chesapeake colluded to avoid
bidding against each other at an October, 2010 state land lease
auction run by the Department of Natural Resources, as well as
during leasing of private property in the state.
(Reporting by Brian Grow in Cheboygan; Writing by Joshua
Schneyer in New York; Editing by Jeffrey Benkoe)