Home Business Chesapeake Energy And Encana Corporation Sued By A Michigan Firm

Chesapeake Energy And Encana Corporation Sued By A Michigan Firm

Chesapeake Energy Corporation (NYSE:CHK) and Encana Corporation (NYSE:ECA) have been charged in an antitrust lawsuit filed by a major landowner in Michigan. The two energy companies were accused of committing conspiracy in rigging the bidding of oil and gas rights three years ago, according to a report from Reuters.

Chesapeake Energy And Encana Corporation Sued By A Michigan Firm

The complaint was filed by Northstar Energy Corporation, which owns approximately 10,000 acres in the Utica-Collingwood oil and gas shale formation in Michigan. Northstar Energy was one of the nine private landowners and counties discussed in the e-mails between the top executives of Chesapeake Energy Corporation (NYSE:CHK) and Encana Corporation (NYSE:ECA) – wherein they traded proposals to divide bidding responsibilities in an effort to control land prices in Michigan in 2010. Reuters quoted and published some of the e-mails.

Northstar Energy claimed in its lawsuit that Chesapeake and Encana avoided bidding against each other to obtain oil and gas rights on its acreage. The company argued that Chesapeake and Encana violated the United States antitrust law and Michigan statues because they “formed an anti-competitive agreement and shared proprietary information.”

In a statement, Jay Averill, spokesperson for Encana said the company plans to defend vigorously any lawsuit filed against it in connection with the alleged bid rigging of land prices in Michigan. Encana Corporation (NYSE:ECA) emphasized that its own inquiry about the issue concluded that its executives did not collude with their counterparts at Chesapeake Energy Corporation (NYSE:CHK) during the bidding process for land leasing in Michigan in 2010. The board of directors of Chesapeake also conducted their own internal investigation regarding the issue and found that the company did not breach antitrust laws.

Chesapeake and Encana admitted in their previous statements that they tried to form a joint venture, but failed to seal an agreement.

The U.S. Department of Justice and the attorney-general in Michigan have commissioned an investigation into whether Chesapeake and Encana violated antitrust laws in the state. Last week, the spokesperson of Michigan Attorney General Bill Schuette said, “The importance of independent – rather than internal – investigations cannot be emphasized enough in a case involving antitrust bid-rigging allegations. Our thorough, independent investigation into these serious allegations will continue.”

Darren Bush, a former Justice Department antitrust attorney and professor of antitrust law at the University of Houston opined that the documents in the lawsuit seemed to show that Chesapeake Energy Corporation (NYSE:CHK) and Encana Corporation (NYSE:ECA) could be in trouble. Bush said, “There is one world where you do not want to be an antitrust defendant. That is where there are really damning documents suggesting you engaged in restraint of trade. This is the world that Chesapeake and Encana find themselves in right now.”

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