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 denied the charges, saying a board investigation found
"no agreement was reached and no violation of antitrust law
occurred. Such charges have no merit."
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 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 tom.fowler@wsj.com
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