Under the direction of CEO Aubrey McClendon, Chesapeake Energy Corp. plotted with its top competitor to suppress land prices in one of America’s most-promising oil and natural-gas areas, a Reuters investigation has found.
Having grown up in Maryland, I think Chesapeake Energy should be a Maryland/Virginia based company. Nope...Oklahoma.
In emails between Chesapeake — which is involved in Ohio’s Utica-shale ventures — and Encana Corp., Canada’s largest natural-gas company, the rivals repeatedly discussed how to avoid bidding against each other in a public-land auction in Michigan two years ago and in at least nine prospective deals with private landowners in the state.
Pssst...I'll show you mine if you show me yours.
In one email, dated June 16, 2010, McClendon told a Chesapeake deputy that it was time “to smoke a peace pipe” with Encana “if we are bidding each other up.” The Chesapeake vice president responded that he had contacted Encana “to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim.” McClendon replied: “Thanks.”
John and I once smoked a peace pipe...no wait, that was something different.
That's a joke and should be taken as an admission of nothing.
That exchange, and at least a dozen other emails reviewed by Reuters, could provide evidence that the two companies violated federal and state laws by seeking to keep land prices down, antitrust lawyers said.
Sheesh, what's wrong with a little monopsony power over land prices? Other than the whole inefficiency thing I mean.
“The famous phrase is a ‘smoking gun.’ That’s a smoking H-bomb,” said Harry First, a former antitrust lawyer for the U.S. Department of Justice, of the emails.
In my head, Harry Frist sounds like Jeff Spicoli when he talks. Awesome!
“When the talk is explicitly about getting together to avoid bidding each other up, it’s a red flag for collusion, bid-rigging, market allocation.”
'People on 'ludes should not drive.'
The revelation of the discussions between Encana and Chesapeake, the nation’s second-largest natural-gas producer, comes as McClendon already is under fire. The company’s board stripped him of his chairmanship after Reuters reported that he took out more than $1.3 billion in personal loans from a firm that also finances Chesapeake. The IRS and the Securities and Exchange Commission have launched inquiries.
Well, if we just banned reporters we wouldn't have these problems.
Ohio Attorney General Mike DeWine is looking into allegations of fraud by Chesapeake that might have led to investment losses for Ohio pension funds.
Red, Red, DeWine, you make me feel so fine.
The Oklahoma-based company has leases on about 1 million acres in Ohio’s Utica shale, more than any of its competitors.
Private-industry cartels are forbidden in the United States, where price-fixing between competitors is illegal under the Sherman Antitrust Act. Violations carry stiff penalties. Companies can be fined $100 million and individuals $1 million for each offense.
Given that choice, I'd rather be an individual.
via www.dispatch.com
