The latest in business news reveals that PA’s Attorney General Michelle Henry and the Federal Trade Commission (FTC) have taken steps to address potential monopolistic behavior in a massive $5.2 billion deal between Quantum Energy Partners, a private equity firm, and EQT Corporation, a major natural gas producer.
So, what’s the big deal?
Quantum and EQT are big players in the natural gas industry, especially in the Appalachian Basin – the U.S’s leading gas-producing region. If Quantum becomes a dominant shareholder in EQT, it would earn a seat at EQT’s decision-making table, which many believe could lead to anti-competitive practices.
Attorney General Henry expressed concerns over such deals, saying they might threaten the affordability of energy for regular citizens by reducing competition.
What does the proposed deal look like?
EQT aims to acquire Quantum Energy’s assets, Tug Hill and XcL Midstream. In return, Quantum would get a substantial amount of EQT stock, making it one of EQT’s major shareholders. Initially, this deal would have also allowed Quantum a significant say in EQT’s operations.
However, legal concerns have been raised. The arrangement might be illegal as it could lead to unfair business practices, according to legal guidelines set by the Clayton Act and the Pennsylvania Unfair Trade Practices and Consumer Protection Law.
So, what’s being done about it?
To address these concerns, a final agreement has been proposed with the following key points:
- Quantum will not have a seat on EQT’s board or any of the top gas producers in the Appalachian Basin without prior approval.
- Quantum must sell its shares in EQT by a set, undisclosed date.
- While Quantum owns EQT shares, these will be in a voting trust. Any voting will be done in proportion to other EQT shareholders.
- Quantum is restricted from buying more EQT shares without prior permission.
- Certain entanglements and agreements between the two firms, like noncompete clauses, will be undone or prohibited.
- Both EQT and Quantum are required to uphold antitrust standards.
- A monitor will be appointed to ensure all the above rules are followed.
This complaint and subsequent resolution come courtesy of the dedicated efforts of key figures in the legal field, namely Chief Deputy Attorney General Tracy Wertz, Assistant Chief Deputy Attorney General Joseph Betsko, and Senior Deputy Attorney General Norman Marden.