A proposed settlement between the U.S. Department of Justice (DOJ) and two independent producers, which allegedly rigged bidding in a government lease sale in Colorado, would nearly double the fines to be paid by the companies, compared with a previous settlement, according to documents filed recently in the United States District Court for the District of Colorado.
Under terms of the new settlement, SG Interests Ltd (SGI) and Gunnison Energy Corp. (GEC) would each pay $275,000, in addition to $206,250 by SGI and $245,000 by GEC in a separate but related action involving False Claims Act violations, for a total of $1,001,250. The two companies would also be required to provide DOG notice of any joint bidding at oil and gas lease auctions conducted by the Bureau of Land Management (BLM) for a period of five years.
The settlement was approved by Judge Richard Matsch at a hearing Monday at the Byron White United States Courthouse in Denver.
A previous settlement, which included $275,000 in fines for each company, was rejected by a federal district court judge in December (see Daily GPI, Dec. 21, 2012). Matsch at that time made it clear that he did not feel the proposed fines were adequate, calling them a “slap on the wrist” for the companies and noting that in an earlier, separate case an environmental activist convicted of falsifying bids in a federal lease auction was sentenced to two years in prison (see Daily GPI, Aug. 1, 2011).
The case revolves around an alleged noncompete agreement between the companies for a 2005 lease sale by the federal BLM in Colorado.
SGI and GEC allegedly colluded in bidding, winning four leases in the Ragged Mountain area. Only one of the companies bid on those leases, as a means of keeping the price down, according to DOJ. Another 18 leases that went to the two companies in the same lease sale were left out of the antitrust case.
The settlement proposed by DOJ was supposed to make up for the difference between the low-ball prices paid for the four leases and what the companies would have had to pay if they had competed, calculating that they would have each had to pay at least $275,000. Doubling that created the proposed $550,000 deal.
Matsch said the companies gamed the BLM leasing process and accused them of exhibiting “unrepentant arrogance” in a statement filed with the court. Thus, he concluded, “it is not in the public interest to approve a final judgment that permits a defendant to leave its civil action in such a smirking, self-righteous attitude.”
DOJ said in its most recent motion that “the revised settlements constitute meaningful relief that compensate the United States for the damages it incurred as a result of the alleged antitrust violations, serve as a deterrent to these defendants from engaging in joint bidding that violates the antitrust laws, and put others in the industry on notice that such anti-competitive conduct will not be tolerated.”
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