Criminal Charges Will Be Brought For Section 2 Violations, The DOJ Warns

• Published date: 11 March 2022
• Subject Matter: Anti-trust/Competition Law, Criminal Law, Antitrust, EU Competition , White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Winston & Strawn LLP
• Author: Jeffrey J. Amato and Johanna Rae Hudgens

The U.S. Department of Justice (DOJ) has signaled its readiness to criminally prosecute individual executives whose conduct violates Section 2 of the Sherman Act. This section makes it unlawful for any person to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations"'in other words, targeting those actions taken to attain or preserve monopoly power.

Deputy Assistant Attorney General for Criminal Enforcement Richard Powers answered emphatically in the affirmative when asked, during a panel discussion at a conference on white collar crime, whether the Antitrust Division is prepared to bring criminal charges in monopolization cases.

POWERS' RECENT REMARKS

While Powers indicated that he was "not making any announcement" then and there, he reminded his audience that "Congress made violations of the Sherman Act, both Section 1 and Section 2, a crime." Powers further emphasized that "market concentration and consolidation is not only a civil antitrust issue," so criminal prosecutions for Section 2 violations are justified if the facts and law allow.

DEATH OF CRIMINAL SECTION 2 ENFORCEMENT

This update does not reflect any change to the Sherman Act itself. Nevertheless, this signal of the DOJ's priorities and position may impress upon many as news in light of previous messaging and enforcement patterns.

The DOJ is empowered by the Sherman Act to criminally pursue both corporations and individuals for violations of Section 1 and Section 2. For individuals, a criminal conviction can result in prison sentences and sizable monetary fines.

However, criminal enforcement of the antitrust laws has been largely reserved for "hardcore" offenses, such as "naked conspiracies" between and among competitors to fix prices, rig bids, or allocate markets or customers. Such violations have been more unanimously condemned as especially harmful to consumer welfare and lacking procompetitive benefit that may justify those harms.

In contrast, other violations'including unilateral and joint business conduct'have historically not been the subject of frequent prosecution by the DOJ, as a more intensive factual inquiry is required in assessing the benefits and costs of such conduct to consumers. In fact, the last time the DOJ secured a criminal conviction in a Section 2 case, against either an individual or a corporation, was in 1979. Only 11 total...