Case Description
In August 2023, The Pennsylvania Attorney General’s Office filed a Complaint in the District Court for the Western District of Pennsylvania against EQT Corporation, Quantum Energy Partners, and their joint production entity Quantum EQT Production Holdings, LLC (QEPH). The complaint challenged a proposed transaction through which EQT, the nation’s largest natural gas producer, would acquire Quantum Energy’s THQ Appalachia I, LLC, also known as Tug Hill, the eleventh largest Appalachian Basin natural gas producer. In addition, EQT would acquire Quantum Energy’s THQ-XcL Holdings I, LLC, also known as XcL Midstream, which transports and processes Tug Hill’s natural gas production. In return, Quantum would acquire up to 55 million shares of EQT stock and become one of EQT’s largest shareholders. The proposed transaction, as originally structured, also granted Quantum the right to an EQT board seat, to be held by Quantum’s CEO or another Quantum designee. The Pennsylvania Attorney General alleged that this agreement violated Section 8 of the Clayton Act and would result in an unfair method of competition in violation of Section 3 of the Pennsylvania Unfair Trade Practices and Consumer Protection Law.
The case was resolved through a consent judgment negotiated alongside the Federal Trade Commission which contained the following terms:
- Prohibit Quantum from serving on EQT’s Board for the duration of the judgment and on the Board of any of the top seven Appalachian Basin natural gas producers, which account for a substantial majority of the market, without prior Commission approval.
- Require Quantum to sell its EQT shares by a non-public date certain.
- Require that during the period when Quantum owns EQT shares, the shares will be held in a voting trust, and any votes will be carried out by the trustee proportional to all other EQT shareholders.
- Require that for the duration of the judgment, Quantum is prohibited from acquiring additional EQT shares absent prior Commission approval.
- Require Quantum and EQT immediately to unwind TMC, including any noncompete provisions.
- Impose further limitations on future entanglements between EQT and Quantum, including prohibiting Quantum and EQT from entering into noncompete agreements other than those in connection with and ancillary to the sale of a business, assets, or company.
- Require EQT and Quantum to each design, maintain, and operate an antitrust compliance program.
- Impose additional provisions designed to ensure the effectiveness of the final consent judgment, including the appointment of a monitor to track compliance.
