ANTITRUST VIOLATIONS

ARTICLES

ANTITRUST VIOLATIONS

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563

II. ELEMENTS OF THE OFFENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565

A. Agreement to Concerted Action . . . . . . . . . . . . . . . . . . . . . . . 565

B. Restraint of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567

C. Interstate Nexus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574

D. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577

III. DEFENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578

A. Withdrawal from Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . 579

B. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579

C. Double Jeopardy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580

D. Single Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581

E. Respondeat Superior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583

F. State Action Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584

G. Petitioning the Government . . . . . . . . . . . . . . . . . . . . . . . . . . 590

H. Regulated Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593

I. Foreign Commerce—Effects, Comity, and Foreign Sovereign

Compulsion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595

IV. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598

A. Federal Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598

1. Section 1 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . 602

2. Section 2 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . 604

B. State Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605

C. International Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . 606

V. PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608

I. INTRODUCTION

The Sherman Act

1

protects free-market competition

2

by prohibiting “[e]very

contract, combination ... or conspiracy” in restraint of trade.

3

Despite the expan-

sive language of the Sherman Act, courts have consistently held that Congress

1. 15 U.S.C. §§ 1–7.

2. See Brown v. Pro Football, Inc., 518 U.S. 231, 252 (1996) (“The basic premise underlying the Sherman Act

is the assumption that free competition among business entities will produce the best price levels.”); Nat’l Soc’y

of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1978) (“The Sherman Act ref‌lects a legislative judgment

that ultimately competition will produce not only lower prices, but also better goods and services.”).

3. 15 U.S.C. § 1.

563

intended § 1 to prohibit only “unreasonable” restraints of trade.

4

Congress delegated to the courts the task of distinguishing between criminal and

civil violations of the Sherman Act,

5

and extensive federal common law interprets

both classes of violations. Courts consistently refer to the breadth of the Sherman

Act and note that Congress expected courts to shape the broad language of § 1 by

creating a common law of antitrust.

6

The Sherman Act includes a number of com-

mon law terms to assist courts in determining whether it has been violated.

7

Some

commentators, however, have questioned the use of “unelaborated common law

words” in the Sherman Act.

8

The debate centers on whether Congress intended

to def‌ine special classes of prohibited conduct or intended courts to interpret the

statute using “certain customary techniques of judicial reasoning, [for example, to]

consider the reasoning and results of other common law courts, and develop,

ref‌ine, and innovate in the dynamic common law tradition.”

9

Case-by-case ad-

judication facilitates the common law approach to antitrust. Just as common

law evolves over time, the Sherman Act evolves to meet current economic

conditions.

10

This article focuses on criminal antitrust law.

11

Section II outlines the four ele-

ments of a criminal antitrust violation under § 1 of the Sherman Act. Section III

4. See, e.g., Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885 (2007) (“[T]he Court has

repeated time and again that § 1 ‘outlaw[s] only unreasonable restraints.’” (quoting State Oil Co. v. Khan, 522

U.S. 3, 10 (1997))); Texaco v. Dagher, 547 U.S. 1, 5 (2006) (explaining that all agreements in restraint of trade

would be unlawful under the literal language of the Sherman Act and concluding that Congress intended to

analyze and outlaw only those agreements that are unreasonable).

5. See PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW § 303b4–f (4th ed. 2014) [hereinafter

AREEDA & HOVENKAMP] (differentiating between criminal and civil antitrust cases).

6. See, e.g., Leegin, 551 U.S. at 899 (“[T]he Court has treated the Sherman Act as a common-law statute.”);

Nat’l Soc’y of Prof’l Eng’rs, 435 U.S. at 688 (“Congress . . . did not intend the text of the Sherman Act to

delineate the full meaning of the statute or its application in concrete situations.”); see also AREEDA &

HOVENKAMP, supra note 5, § 104 (discussing the development of antitrust common law).

7. See Marc Winerman, The Origins of the FTC: Concentration, Cooperation, Control, and Competition, 71

ANTITRUST L.J. 1, 9–11 (2003) (discussing the evolution of early Sherman Act jurisprudence through the

Supreme Court’s interpretation of the Act’s common law terms); Rudolph J. Peritz, The “Rule of Reason” in

Antitrust Law: Property Logic in Restraint of Competition, 40 HASTINGS L.J. 285, 304 (1989) (noting Senator

Edmunds, a proponent of the Sherman Act, recognized “‘monopoly’ is a technical term known to the common

law”).

8. See PHILLIP E. AREEDA & LOUIS KAPLOW, ANTITRUST ANALYSIS 44 (5th ed. 1997) [hereinafter AREEDA &

KAPLOW]; MARGARET H. LEMOS, Interpretive Methodology and Delegation to Courts: Are ‘Common-Law

Statutes’ Different?, INTELLECTUAL PROPERTY AND THE COMMON LAW (Shyam Balganesh ed., 2013).

9. AREEDA & KAPLOW, supra note 8.

10. Kimble v. Marvel Ent., LLC, 135 S. Ct. 2401, 2412–13 (2015) (“Congress . . . intended that law’s

reference to ‘restraint of trade’ to have ‘changing content,’ and authorized courts to oversee the term’s ‘dynamic

potential.’ We have therefore felt relatively free to revise our legal analysis as economic understanding evolves

and . . . to reverse antitrust precedents that misperceived a practice’s competitive consequences.” (quoting Bus.

Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 732 (1988)); see also Leegin, 551 U.S. at 899 (explaining the

relationship between courts and Congress in interpreting the Sherman Act).

11. The DOJ has the power to prosecute criminal violations under the Sherman Act, Robinson-Patman Act,

and Clayton Act. “[C]riminal prosecution in general and imprisonment in particular have been conf‌ined to

instances of outrageous conduct of undoubted illegality.” AREEDA & HOVENKAMP, supra note 5, § 303b2.

564 AMERICAN CRIMINAL LAW REVIEW [Vol. 58:563

enumerates several defenses to antitrust claims. Section IV discusses federal, state,

and international enforcement. Finally, Section V explains the penalties for crimi-

nal violations.

II. ELEMENTS OF THE OFFENSE

The prosecution, or plaintiff in a civil case, must establish three elements to

prove a violation of § 1: (A) an agreement, knowingly formed, to concerted action,

such as a combination or conspiracy formed by two or more entities;

12

(B) the

agreement unreasonably restrained trade or commerce;

13

and (C) the restrained

trade or commerce is interstate or international in nature.

14

In a criminal antitrust

prosecution, the government must also prove a fourth element—that the defendant

intended to engage in unlawful agreement or conspiracy.

15

Parts A through D of

this section discuss each of these elements.

A. Agreement to Concerted Action

Under § 1 of the Sherman Act, an agreement to concerted action includes con-

spiracy.

16

For the purposes of § 1, a conspiracy exists when two or more competi-

tors or potential competitors come to an agreement, understanding, or meeting of

the minds.

17

The mere existence of the illegal agreement is the offense; accord-

ingly, neither ultimate success nor overt acts furthering the conspiracy must be

12. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554–57 (2007) (“[P]roof of a § 1 conspiracy must include

evidence tending to exclude the possibility of independent action.”); Monsanto Co. v. Spray-Rite Serv. Corp.,

465 U.S. 752, 768 (1984) (explaining that “conscious commitment to a common scheme designed to achieve an

unlawful objective” constitutes requisite agreement).

13. See Leegin, 551 U.S. at 885 (“[T]he Court has repeated time and again that § 1 ‘outlaws only unreasonable

restraints.’”); see also Arizona v. Maricopa Cnty. Med. Soc’y, 457 U.S. 332, 342–43 (1982) (explaining the use

of the rule of reason (described infra Part B of this Section) to assess reasonableness).

14. See 15 U.S.C. § 1; United States v. Peake, 804 F.3d 81, 97 (1st Cir. 2015) (noting that the government is

required to establish the conspiracy’s effect on interstate commerce); Gulf Coast Hotel-Motel Ass’n v. Miss.

Gulf Coast Golf Course Ass’n, 658 F.3d 500, 504 (5th Cir. 2011) (“A complaint alleging a Sherman Act claim

must allege some nexus between the defendants’ conduct and interstate commerce.”); United States v. Giordano,

261 F.3d 1134, 1138 (11th Cir. 2001) (holding that an activity must take place in the f‌low of interstate commerce

or have a substantial effect on interstate commerce in order to meet the jurisdictional element of the Sherman

Act).

15. See United States v. U.S. Gypsum Co., 438 U.S. 422, 435 (1978) (holding that proof of the defendant’s

state of mind or intent is an element of a criminal antitrust offense).

16. Am. Needle, Inc., v. Nat’l Football League, 560 U.S. 183, 190 (2010) (quoting Copperweld Corp. v.

Indep. Tube Corp., 467 U.S. 752, 767 (1984)) (“The meaning of the term ‘contract, combination . . . or

conspiracy’ is informed by the ‘basic distinction’ in the Sherman Act ‘between concerted and

independent action .. ..’”).

17. See Twombly, 550 U.S. at 557 (“A statement of parallel conduct, even conduct consciously undertaken,

needs some setting suggesting the agreement necessary to make out a § 1 claim; without that further

circumstance pointing toward a meeting of the minds, an account of a defendant’s commercial efforts stays in

neutral territory.”); Primetime 24 Joint Venture v. NBC, 219 F.3d 92, 103 (2d Cir. 2000) (quoting Capital

Imaging Assocs. v. Mohawk Valley Med. Assocs., 996 F.2d 537, 542 (2d Cir. 1993)) (holding the conspiracy

element is only satisf‌ied if there is “a combination or some form of concerted action between at least two legally

distinct economic entities”).

2021] ANTITRUST VIOLATIONS 565