Chesapeake, Encana Charged With Antitrust Violations

By Tom Fowler 

Michigan's Attorney General brought criminal charges against Chesapeake Energy Corp. and Encana Corp. on Wednesday, alleging the drillers violated the state's antitrust laws by colluding to keep prices low during a land-lease auction in 2010.

Both energy companies are charged with one count each of antitrust violations and attempted antitrust violations, according to the office of Michigan Attorney General Bill Schuette. The antitrust violations carry a fine of $1 million. The attempted antitrust violations are misdemeanors, each punishable by a $1,000 fine.

Encana had no immediate comment. Chesapeake plans to fight the charges, company spokesman Gordon Pennoyer said.

"As previously disclosed, a thorough investigation conducted by independent counsel retained by Chesapeake's Board in 2012 concluded that Chesapeake's activities in Michigan did not violate antitrust laws, " he said. "This action has no merit and we will vigorously contest it."

According to the state of Michigan, the companies held discussions before a public auction in 2010 and planned to split up lands they would vie for in the Collingwood Shale to avoid a bidding war.

Both companies said previously that internal investigations determined executives didn't violate antitrust laws. The companies said they discussed forming a joint venture for leasing in Michigan, but no agreement was ever reached.

On Wednesday, Mr. Schuette said per-acre lease prices fell from $1,510 to less than $40 in the five months following the state's May 2010 auction, a drop that might have been caused by the alleged conspiracy.

"I will aggressively prosecute any company who conspires to break the law," Mr. Schuette said.

Chester Dawson contributed to this article.

Write to Tom Fowler at [e-mail]

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