Ending what the US Justice Department describes as its
"first . . . challenge to an anticompetitive bidding agreement
for Bureau of Land Management [BLM] mineral rights leases,"
the Department announced on February 15 that it had reached a
settlement with Gunnison Energy Corporation (GEC), SG Interests I
Ltd., and SG Interests VII Ltd. (jointly, SGI) to resolve antitrust
and False Claims Act claims based on an alleged agreement not to
compete in bidding for four natural gas leases sold at auction by
BLM. The federal investigation resulted from a lawsuit filed under
the qui tam provisions of the False Claims Act in 2009.
The qui tam complaint alleged that GEC and SGI made false
statements to the government through an allegedly false
certification by SGI that its winning bid was not the product of
collusion with another bidder.
Summary of the Settlement
In a follow-on antitrust complaint, the Department joined the
qui tam relator in alleging that in 2005 and 2006 GEC and
SGI had agreed that only SGI would bid at certain BLM auctions for
natural gas leases and that SGI would then assign an interest in
the acquired leases to GEC. As a result of the agreement, the
United States alleged, it had received less revenue from the sale
of the four leases than it would have had GEC and SGI competed at
The proposed settlement provides that GEC and SGI will pay a
total of $550,000 to the United States as well as $50,000 in
relator's attorney's fees. Neither company admitted
Other Theories of FCA Liability Related to Federal Mineral
The bid-rigging allegations at issue in this case differ
significantly from recent FCA settlements announced by the Justice
Department in the context of mineral rights and federal leases,
which have typically concerned the underreporting of royalties. In
United States ex rel. Wright v. Chevron USA, Inc. et al.,
5:03-CV-264 (E.D. Tex.), the Justice Department has collected more
than $250 million in settlements since 2009 from at least nine oil
companies. These settlements resolve allegations that each of the
companies systematically underreported the value of natural gas
they took from federal and Indian leases.
Implications of the Settlement
The settlement announced on February 15 suggests increased
coordination between the Justice Department's civil fraud and
antitrust enforcement arms, on the one hand, and the Bureau of Land
Management, on the other. It also reflects qui tam
relators' and the government's increasing use of false
certification theories of liability under the False Claims
Act–theories whose permissible scope remains a source of
debate in the lower courts and seems likely to reach the Supreme
Court in the near future.
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The relatively modest updates to the Guidelines affirm that the antitrust agencies still believe that intellectual property issues do not require an altered analysis, and that the licensing of intellectual property is generally procompetitive.
Last September, we discussed the U.S. Court of Appeals for the Second Circuit's opinion in In re Vitamin C Antitrust Litigation vacating a $147 million judgment against Chinese vitamin C manufacturers...
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