Canada's biggest natural gas producer has recently agreed to pay the state of Michigan $5 million and submit a no contest plea to the charge that it attempted to conspire with Chesapeake Energy Corp to rig an oil and gas lease auction in 2010. Bloomberg said the latest development would come full circle from the time Michigan Attorney General Bill Schuette has filed criminal charges against both companies in March.
According to the complaint, Encana Corp and Chesapeake have violated state antitrust laws by divvying up the counties in which each of the company could seek rights to resource exploration before a scheduled auction in May of that year. The collusion of both companies allegedly caused the bid prices to go down to $40 per acre from $1,510 for that auction in October. Chesapeake had since contested the allegations slapped against the company at a hearing that began today in Cheboygan, which is located on the lower peninsula of Michigan. Bloomberg noted that the crime is punishable by as much as a million dollars in fines.
As a result of the accord reached between the state of Michigan and Encana, Schuette's office revealed today that the $5 million payment would resolve the state's civil lawsuit.
A statement from Schuette's office read, "Allegations of bid-rigging are taken seriously, and today's settlement with Encana is a good result for taxpayers."
Aside from the payout, the state Michigan has also agreed to a delay that would run for 11 months as punishment for Encana's role in manipulating the market until such time that the latter pays the civil settlement and complies with the rest of the accord's terms. Schuette's office also had said that the more serious conspiracy charge has also been dismissed as well.
As for Chesapeake, the company has expressed to continue its fight against the state's allegations. In a statement today, the company said, "This changes nothing for Chesapeake. The Michigan state action has no merit and we are vigorously contesting it."
