from fracking giants, ‘a smoking H-bomb’
June 27, 2012
Well, well, the plot is thickening. Reuters is reporting that it has emails indicating that CEO Aubrey McClendon of Chesapeake Energy Corp. conspired with a key competitor to keep land prices down in shale gas areas of Michigan two years ago. Reuters reports that McClendon tells a Chesapeake vice president in an email that it’s “time to smoke a peace pipe” with rival Encana Corp. of Canada to avoid “bidding each other up.” Other emails show the companies discussing how to avoid bidding against each other in a public-land auction and in deals involving private landowners.
The emails could be used as evidence to show the companies violated antitrust laws, according to the report.
Reuters has a great quote about the emails from Harry First, a former antitrust lawyer from the US Department of Justice: “The famous phrase is a ‘smoking gun.’ That’s a smoking H-bomb,” First said. “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.”
In May, Reuters published a special report about McClendon, who described his company as the “biggest frackers in the world” in a Rolling Stone article. Time has a timeline of Chesapeake woes, including inquiries by the Securities and Exchange Commission and the IRS. Reuters reported in May that U.S. Sen. Bill Nelson (D) of Florida asked the Justice Department to investigate Chesapeake for potential “fraud, price manipulation, conflicts-of-interest, or other illegal activities.”