UPDATE 2-Encana settles Michigan antitrust case, Chesapeake fights on

Mon May 5, 2014 5:54pm EDT
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(Adds details and comment from hearing, context on criminal charges)

By Brian Grow

CHEBOYGAN, Michigan May 5 (Reuters) - Natural gas producer Encana Corp on Monday agreed to pay Michigan $5 million in a civil settlement that could clear the company of criminal antitrust charges stemming from its role in a 2010 land leasing spree.

Chesapeake Energy Corp, at the same hearing, vowed to fight its own criminal antitrust charges. Michigan's attorney general alleges that Chesapeake conspired with Encana to keep land lease prices artificially low in the state.

At the hearing, in a state court in Cheboygan, Encana pleaded no contest to a state charge it attempted to commit antitrust violations during a land leasing spree in 2010 in which it and Chesapeake were the biggest lease buyers. Both companies faced criminal charges of antitrust violations and attempted antitrust violations.

The court took Encana's plea under advisement and agreed to dismiss charges against the driller if it fulfilled terms of its civil settlement over the next 11 months, Encana spokesman Jay Averill said in an emailed statement.

As part of Encana's settlement, the company also agreed to cooperate with prosecutors in Michigan who are still pursuing a criminal case against Oklahoma City-based Chesapeake.

Michigan's charges against the companies, announced by Attorney General Bill Schuette in March, allege they collaborated to "avoid bidding wars against each other" in a state land lease auction and in negotiations to acquire leases from private landowners. The alleged collaboration caused "prices to plummet," Schuette's office said.

Prosecutors have said the alleged collusion may have been a factor pushing down state lease prices to $40 per acre at public auction in October 2010, from a record-high average $1,510 per acre at the prior auction five months earlier.   Continued...