| March 5
March 5 Oil and gas giants Chesapeake Energy
and Encana Corp. were charged on Wednesday with
colluding to keep oil and gas lease prices artificially low in
the state of Michigan, the state Attorney General Bill Schuette
The announcement follows a lengthy investigation by
Schuette's office into whether the firms -- the biggest land
leasers during a speculative oil and gas leasing boom in
Michigan's Collingwood Shale region during 2010 -- colluded to
avoid prices from rising as they acquired land leases from
Michigan began looking into the companies' activities in
2012 after a Reuters investigation found that executives from
the two firms discussed proposals to divide bidding
responsibilities in the state for nine private landowners and
counties in Michigan.
"I will aggressively prosecute any company who conspires to
break the law," Schuette said in a statement.
The companies were charged with one count each of antitrust
violations "relating to a contract or conspiracy in restraint of
commerce," and one count each of attempted antitrust violations.
The boards of both Chesapeake and Encana previously
conducted internal investigations and said they found no
collusion. In earlier statements, the companies have
acknowledged holding talks about forming a joint venture in
Michigan during 2010, but said no agreement was ever reached.
The charges are misdemeanors which carry penalties that can
include prison terms and fines for individuals, and up to a $1
million fine for a corporation.
In emails reviewed by Reuters in its investigation, then
Chesapeake CEO Aubrey McClendon and other high-ranking
Chesapeake and Encana executives discussed in 2010 how to keep
lease prices on both state and private lands from rising by
avoiding "bidding each other up."(r.reuters.com/deg27v)
The discussions occurred after a land lease frenzy pushed
Michigan prices as high as $3,000 per acre in mid-2010. Lease
prices subsequently fell sharply in the state later that year.
Market allocation agreements between competitors are illegal
under the Federal Sherman Antitrust Act and state laws.
Encana and Chesapeake executives had been hoping for a civil
resolution of the matter.
As recently as Feb. 14, an attorney representing Encana
Corp. told a judge in a civil antitrust-related case in Michigan
that both Encana and Chesapeake were working toward a settlement
with the state attorney general that could end his office's
criminal investigation into the firms.
Encana and Chesapeake still face a separate, federal
The U.S. Department of Justice has been looking into the
possibility of anticompetitive practices in the purchase and
lease of oil and gas properties in Michigan and elsewhere.
McClendon left Chesapeake last April and now runs a new
company, American Energy Partners.
Chesapeake and Encana are expected to be arraigned on March
19 in a Michigan state court in Cheboygan County, the Attorney
General's office said.