Federal Government Clears Chesapeake Energy In Michigan Case

Monday, May 5th 2014, 5:26 pm
By: News 9

Officials with Chesapeake Energy say a settlement between their co-defendant and the state of Michigan in a pending anti-trust case "changes nothing" for them, and Chesapeake will continue to "vigorously contest" the Michigan charges.

On Monday, Michigan Attorney General Bill Schuette announced a $5 million civil settlement with Delaware-based Encana Oil & Gas to resolve allegations that it and Chesapeake conspired to suppress prices in a Michigan land auction in 2010. In addition to the civil settlement, Encana also reportedly pleaded no contest to one count of criminal antitrust violations.

In a statement, Attorney General Schuette said, "Allegations of big-rigging are taken seriously, and today's settlement with Encana is a good result for taxpayers."

The settlement comes on the same day that a preliminary hearing in the case against Chesapeake and Encana was to begin. According to a news release from the Michigan AG's office, the proceedings against Chesapeake went ahead as planned. The hearing is to determine if there's sufficient evidence to bring the matter to trial.

Just last week, the U.S. Department of Justice informed Chesapeake that its probe into the collusion allegations was now closed and that Chesapeake and Encana had been cleared of any wrong-doing. There was speculation among legal experts that the DOJ decision might lead to a similar decision by the Michigan Attorney General.

Mr. Schuette filed two criminal charges apiece against Chesapeake and Encana back in early March: One count each of antitrust violations relating to a contract or conspiracy in restraint of commerce, a high court misdemeanor punishable by a $1,000,000 fine for a corporation; and, one count each of attempted antitrust violations, a misdemeanor punishable by a $1,000 fine.

Here is the complete statement sent to News 9 today from Gordon Pennoyer, Director of Strategic Communications for Chesapeake Energy:

"This [settlement] changes nothing for Chesapeake. The Michigan State action has no merit and we are vigorously contesting it. There was never an agreement between Chesapeake and Encana regarding leasing activity in Michigan in 2010. Our Board reached that conclusion more than a year ago after a thorough review, and now the Department of Justice Antitrust Division has closed its investigation related to leasing activities in Michigan."

3/6/2014 Related Story: Michigan AG Files Charges Against Chesapeake Energy