Encana settles Michigan antitrust case - Beckley, Bluefield & Lewisburg News, Weather, Sports

Encana settles Michigan antitrust case

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Delaware-based Encana Oil & Gas USA has agreed to pay $5 million to settle an oil and gas lease bid-rigging case filed by the Michigan Attorney General's Office.

Encana entered a no contest plea to one count of criminal attempted antitrust violations, a misdemeanor, Attorney General Bill Schuette said.

Schuette's office had filed criminal charges against Encana and Chesapeake Energy in Cheboygan District Court in March, charging the two companies schemed to avoid a bidding war in Michigan's twice-yearly public auctions as well as private negotiations for oil and gas leases, causing lease prices to plummet drastically over a five-month period in 2010. The alleged violations, revealed in a series of emails discussing an agreement to split up Michigan counties so each company would be an exclusive bidder for both public and private leases in specific areas, was uncovered by the Reuters news agency in 2012.

The state maintains 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 said.

“Allegations of bid-rigging are taken seriously, and today's settlement with Encana is a good result for taxpayers,” Schuette said in a statement announcing the settlement.

Under the terms of the settlement, half of the $5 million civil payment will be applied to funds managed by the Department of Natural Resources that were affected by the bid-rigging, with the remainder used to fund antitrust enforcement activities in Michigan.

The company also agreed to enter into a four-year Corporate Integrity Agreement with the state as part of a consent judgment, providing increased transparency of future oil and gas lease bidding activity, Schuette said.

In exchange for the no contest plea, the state agreed to an 11-month delayed sentence on the attempted antitrust violation charge and to dismiss the high court misdemeanor charge of antitrust violations relating to a contract or conspiracy.

If Encana abides by the terms of the plea agreement, Schuette said the criminal case will be dismissed after 100 months.

Chesapeake also has been charged with antitrust violations relating to a contract or conspiracy in restraint of commerce, a high court misdemeanor punishable by a $1 million fine, and one count of attempted antitrust violations, a misdemeanor punishable by a $1,000 fine.

The antitrust case against Chesapeake is ongoing, Schuette said. A preliminary examination began Monday in Cheboygan District Court and is expected to run through Thursday, after which Judge Maria Barton will decide if 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,” Schuette said.