Antitrust Violations

• Author: Dannette Blain/Jarred L. Barlow/William H. Chang/Sean C. Swinford
• Pages: 461-510

ANTITRUST VIOLATIONS

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461

II. ELEMENTS OF THE OFFENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463

A. Agreement to Concerted Action . . . . . . . . . . . . . . . . . . . . . . . 463

B. Restraint of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465

1. Per Se Unreasonable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466

2. Rule of Reason. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469

3. Quick Look . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472

C. Interstate Nexus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473

D. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476

III. DEFENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477

A. Withdrawal from Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . 478

B. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479

C. Double Jeopardy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479

D. Single Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480

E. Respondeat Superior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482

F. State Action Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484

G. Petitioning the Government . . . . . . . . . . . . . . . . . . . . . . . . . . 489

H. Regulated Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493

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

Compulsion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495

IV. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498

A. Federal Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498

1. Section 1 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . 502

2. Section 2 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . 505

B. State Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506

C. International Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . 507

V. PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509

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 broad

1. 15 U.S.C. §§ 1–7.

2. See, e.g., 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 Pro. 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.

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language of the Sherman Act, courts have consistently held that § 1 prohibits 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 interpreting both classes of violations

with extensive federal common law.

6

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.

7

The Sherman Act includes a number

of common law terms to assist courts in determining whether the Act has been vio-

lated.

8

Some commentators, however, have questioned the use of “unelaborated

common law words” in the Sherman Act.

9

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 rea-

soning, [for example, to] consider the reasoning and results of other common-law

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

10

Case-by-case adjudication facilitates the common law approach to antitrust. Just as

common law evolves over time, the Sherman Act evolves to meet current eco-

nomic conditions.

11

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)); Nat’l Soc’y of Pro. Eng’rs, 435 U.S. at 687–88 (1978) (explaining that Congress intended The

Sherman Act to prohibit only unreasonable restraints and that the literal language of § 1 would outlaw the

entirety of “private contract law” because “restraint is the essence of every contract”).

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 id. (explaining the differentiation between criminal and civil antitrust cases).

7. 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 Pro. 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).

8. 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”).

9. See PHILLIP E. AREEDA & LOUIS KAPLOW, ANTITRUST ANALYSIS 43–44 (5th ed. 1997) [hereinafter AREEDA

& KAPLOW]; MARGARET H. LEMOS, Interpretive Methodology and Delegations to Courts: Are “Common-Law

Statutes” Different?, in INTELLECTUAL PROPERTY AND THE COMMON LAW 89, 94–95 (Shyamkrishna Balganesh

ed., 2013) (analyzing the implications of the judicial freedoms afforded by common law statutes).

10. AREEDA & KAPLOW, supra note 9, at 44.

11. See Kimble v. Marvel Ent., LLC, 135 S. Ct. 2401, 2412–13 (2015) (“Congress . . . intended [the Sherman

Act’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, 731–32 (1988)); Leegin, 551 U.S. at 899–900

(explaining that in context of the Sherman Act, stare decisis constrains the Court to a lesser degree than it

ordinarily would).

462 AMERICAN CRIMINAL LAW REVIEW [Vol. 59:461

This article focuses on criminal antitrust law.

12

Section II outlines the four ele-

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

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;

13

(B) the

agreement unreasonably restrained trade or commerce;

14

and (C) the restrained

trade or commerce is interstate or international in nature.

15

In a criminal antitrust

prosecution, the government also generally has to prove the requisite state of mind

—that the defendant intended to engage in unlawful agreement or conspiracy.

16

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.

17

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

12. 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.

13. 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).

14. See Leegin, 551 U.S. at 885; 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);

NCAA v. Alston, 141 S. Ct. 2141, 2161 (2021) (“[T]he Sherman Act prohibits only unreasonable restraints of

trade . . . attempts to “‘[m]ete[r]’ small deviations is not an appropriate antitrust function.” (quoting Herbert

Hovenkamp, Antitrust Balancing, 12 N.Y.U. J. L. & BUS. 369, 377 (2016))).

15. 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).

16. 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); United States v. Nippon Paper Indus. Co.,

109 F.3d 1, 6–7 (1997) (“[T]he Gypsum Court held that criminal intent generally is required to convict under the

[Sherman] Act.”).

17. See 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 . . . .’”).

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