Encana Corporation (TSE:ECA) announced earlier today that it would begin an investigation into accusations that there was collusion between it and Chesapeake Energy Corporation (NYSE:CHK). The accusations of collusion came from a Reuters investigation. The authors claimed to have had access to emails between executives in the companies.

The collusion levelled at the firms centres around the leasing of land in Michigan in 2010. The emails were sent between top executives including Chesapeake Energy Corporation (NYSE:CHK) CEO Aubrey McClendon and the head of Encana’s US operation, Jeff Wojahn. The correspondence contained many reference to organization of bidding in order to keep the prices lower.

Encana will now investigate in full the goings on between the two companies in order to prepare itself for any legal action that might be coming its way. The Michigan Department of Natural Resources, while conducting its own investigation, has asked the state’s Attorney General to review the allegations.

It is unclear at this time whether or not the Attorney General had gotten involved in an investigation of the case. There may be trouble ahead for both energy companies as Michigan, and possibly the federal government, look deeply into business practices.

Both companies denied any wrongdoing when asked to comment on the story yesterday. Spokespeople said the firms had been considering entering into a joint bid in the auction, which would have been legal, but ultimately decided to forgo that option.

According to antitrust experts cited by Reuters, talking and planning a joint venture, like the firms did in this instance, without following through on it, may constitute a crime in itself. Reuters points to the price of similar land leases in Michigan running for $1,413 in a June auction, but falling to $46 in the October auction the emails centred around.

Both firms will need strong defences in order to protect them from these allegations. Encana’s start, pursuing a detailed internal investigation, may help in the long run. Chesapeake is under the weight of so many investigations at the moment it may not even register this one.

Chesapeake Energy Corporation (NYSE:CHK) is currently under review for the actions of its CEO Aubrey McClendon. The executive took loans from the company’s creditors, and used personal shares in company wells as collateral. He also ran a secret hedge fund while at the head of the United States’ second largest natural gas provider.

Both firms are bound to be tied to this antitrust case for some time to come. Its results will probably not be known or revealed for months, if not years and the allocation of wrong doing might outlast the companies themselves.

Regulators are sure to make announcements in the coming weeks signalling their intentions regarding the current accusations. The firms, and their shareholders, will wait with bated breath until some announcement is made. If the Michigan attorney general, or another actor, decides to take the case into a court room, it will certainly mean a long drawn out legal procedure.