Michigan Attorney General Bill Schuette said Wednesday that he has filed criminal charges against Chesapeake Energy Corp. and Calgary-based Encana Corp., accusing them of colluding to avoid bidding against each other for Michigan oil and gas leases.
Schuette said the antitrust violations happened in 2010, when Oklahoma City-based Chesapeake and Encana bought natural gas leases in Michigan.
"I will aggressively prosecute any company who conspires to break the law," he said.
In a statement, the attorney general's office said it suspects collusion was responsible for a steep drop in the price of drilling rights auctions in Michigan.
"In the five-month period following the state's May 2010 auction, this alleged conspiracy may have been a key driver behind the state-held lease price in Michigan going from $1,510 per acre in May 2010 to less than $40 an acre at the October 2010 auction," Schuette's office said.
An arraignment is scheduled March 19 in Cheboygan County District Court in Cheboygan for representatives of the two companies. The charges carry a penalty of up to two years' imprisonment for individuals and a fine of up to $1 million for corporations.
Chesapeake spokesman Gordon Pennoyer told The Associated Press that the filing of the charges disappointed his company.
"No agreement was ever reached between Chesapeake and Encana," Pennoyer said in an email. "As previously disclosed, a thorough investigation conducted by independent counsel retained by Chesapeake's board in 2012 concluded that Chesapeake's activities in Michigan did not violate antitrust laws. This action has no merit and we will vigorously contest it."
Encana spokesman Jay Averill said his company "denies and will vigorously defend the charges put forth by the Michigan attorney general's office."
"In 2012 Encana's board undertook a comprehensive investigation into the allegations of collusion with competitors relating to land transactions in Michigan, and concluded that Encana did not engage in such conduct," Averill said.
That probe and other available evidence "clearly show that no agreement was reached and no violation of antitrust law occurred," he added.