The Return Of Criminal Sanctions For Violating Section 2 Of The Sherman Act

Published date11 March 2022
Subject MatterAnti-trust/Competition Law, Criminal Law, Antitrust, EU Competition , White Collar Crime, Anti-Corruption & Fraud
Law FirmArnold & Porter
AuthorMr Andre Geverola and Javier Ortega

Soon after taking the helm at the Antitrust Division of the US Department of Justice (DOJ), Assistant Attorney General (AAG) Jonathan Kanter indicated that enforcement of Section 2 of the Sherman Act, which prohibits monopolistic conduct, would be a top priority. During a speech in January 2022, Kanter bemoaned the dearth of Section 2 enforcement actions in recent decades, emphasizing the need for "litigation that sets out the boundaries of the law as applied to current markets . . . ."1

AAG Kanter's deputy for criminal enforcement, Richard Powers, elaborated on AAG Kanter's position in March 2022. Powers stated that "market concentration and consolidation is not only a civil antitrust issue."2 According to Powers, "[i]f the facts and the law lead us to the conclusion that a criminal charge based on a Section 2 violation is warranted, then that's what we'll do, we'll charge it."3

This Advisory provides historical background for the DOJ's recent statements on Section 2 enforcement, and provides guidance on how the DOJ is likely to focus its attention moving forward.

Past Section 2 Enforcement

Like Section 1 of the Sherman Act, Section 2 provides for criminal penalties:

Every person who shall 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, shall be deemed guilty of a felony and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.4

Following passage of the Sherman Act in 1890, DOJ brought a number of criminal Section 2 cases in the first half of the past century. In a landmark ruling in 1946, American Tobacco Co. v. United States, 5 the Supreme Court upheld criminal enforcement of Section 2. In affirming the convictions of several tobacco companies for jointly monopolizing, attempting to monopolize, and conspiring to monopolize the market, the Court set forth the following standard:

A correct interpretation of the statute and of the authorities makes it the crime of monopolizing, under s 2 of the Sherman Act, for parties, as in these cases, to combine or conspire to acquire or maintain the power to exclude competitors from any part of the trade or commerce among the several states or with foreign nations, provided they also have such a power that they are able, as a group, to exclude actual or potential competition from the field and provided that they have the intent and purpose to exercise that power.6

The Supreme Court made clear, however, that "[n]either proof of exertion of the power to exclude nor proof of actual exclusion of existing or potential competitors" was necessary for a violation.7

In the three decades following this decision, DOJ continued to bring criminal Section 2 cases, but ceased the practice without fanfare after 1977.8 In its final case, DOJ charged two airlines with criminal violations of Section 1 and Section 2 for conspiring to exclude a competing airline.9 In denying the defendants' motion to dismiss the indictment, the court did not question the government's legal theory, describing the indictment as "charg[ing] defendants with engaging in a classic antitrust conspiracy."10 Soon thereafter, one defendant entered a nolo contendere plea and the other pleaded guilty.11

Despite this favorable outcome, criminal enforcement under Section 2 fell off a precipice after this case.12 AAG Kanter appears ready to reverse this decades-long trend and his future plans likely will draw inspiration from the not-so-recent past.

What Would a...

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