Summary
Annual white collar crime survey
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Extract
Antitrust violations.
I. INTRODUCTION
The Sherman Act(1) ("Act"), the primary federal antitrust provision, aims to promote and protect competition(2) by subjecting to criminal sanctions any person "who shall make any contract or engage in any combination or conspiracy" in unreasonable restraint of interstate commerce.(3) Although the Act does not distinguish between criminal and civil offenses,(4) the Supreme Court has held that mens rea must be proved in criminal prosecutions.(5) The Act, void of clear legislative directives, has spawned the development of federal common law in both the criminal and civil realms.(6) This Article focuses on the criminal aspects of the Act. Criminal enforcement by the Department of Justice Antitrust Division (the "Division") in recent years has followed a policy of bringing fewer but more significant prosecutions.(7) These prosecutions involve bigger firms, larger industries and higher volumes of commerce, and target both national and international violations of the Act.(8) Recently, the Division has expanded its challenge to international violations under the "effects doctrine," which provides that foreign conduct intended to produce "a substantial effect" in the United States is subject to federal antitrust laws.(9) This Article outlines the substance of an antitrust violation under [sections] 1 of the Act. Section II discusses the four elements of a criminal offense under the Act. Section III presents the defenses to an allegation of an antitrust violation. Section IV distinguishes between federal, state and international enforcement, and Section V explains the penalties for a criminal violation. Finally, Section VI discusses recent developments in international enforcement. II. ELEMENTS OF THE OFFENSE To prove a criminal violation of [sections] 1 of the Act, the government must establish four elements: (1) an agreement to concerted action, such as a combination or conspiracy foamed by two or more entities;(10) (2) that the agreement unreasonably restrained trade or commerce;(11) (3) the interstate nature of the restrained trade or commerce;(12) and (4) general intent.(13) Parts A through D of this Section discuss each of these elements sequentially. A. Agreement Under [sections] 1 of the Act, a conspiracy requires "an agreement, understanding or meeting of the minds between at least two competitors, for the purpose of, or with the effect of, unreasonably restraining trade."(14) The illegal agreement itself constitutes the requisite actus reus; thus, neither completion of the conspiracy nor any overt acts furthering the conspiracy need be pleaded or proven in a case brought under the Act.(15) The venture's contractual foam and ultimate success are immaterial as long as the parties form an illegal agreement.(16) B. Restraint of Trade The agreement or conspiracy must "unreasonably" restrain trade.(17) The Supreme Court has noted that the phrase "restraint of trade ... refers ... to a particular economic consequence, which may be produced by quite different sorts of agreements in varying times and circumstances."(18) Such consequences generally include the elimination of competition. Typically, competition is diminished as a result of the creation of a monopoly, artificial maintenance of prices, restriction of output, refusal to deal or any interference with the free play of market forces.(19) To determine whether a given activity constitutes an unreasonable restraint of trade, courts have employed three analytical approaches. First, the "per se" rule, announced by the Supreme Court in United States v. Socony-Vacuum Oil Co.,(20) presumes the illegality of activities that have no legitimate justification and lack any redeeming competitive purpose.(21) Per se treatment applies "once experience with a particular type of restraint enables the Court to predict with confidence that the rule of reason analysis will condemn it."(22) Examples of agreements reflecting judicial condemnation under the rule of reason include certain price-fixing arrangements,(23) allocation of markets,(24) group boycotts,(25) and some tying arrangements.(26) The purpose of the per se unreasonableness test is to avoid time-consuming and costly investigation into the economics of agreements that are almost always anticompetitive, and have no procompetitive benefits.(27) Under the per se standard, therefore, the government need only prove the existence of an unlawful agreement.(28) "Virtually all" criminal prosecutions brought under the Act by U.S. Attorneys involve offenses governed by the per se rule although per se violations represent only a small portion of all antitrust cases.(29) Second, "rule of reason" scrutiny applies to activities that have not been labeled egregiously anticompetitive under the Act,(30) such as information exchanges(31) and vertical maximum price fixing.(32) Under the "rule of reason" analysis, courts look at the full context of the agreement to determine whether its anticompe...See the full content of this document
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