What's Old Is New Again: DOJ Prosecutes First Criminal Section 2 Case Since 1977

• Published date: 09 November 2022
• Subject Matter: Antitrust/Competition Law, Criminal Law, Antitrust, EU Competition , Crime
• Law Firm: Arnold & Porter
• Author: Mr Andre Geverola, Sonia Kuester Pfaffenroth and Matthew Tabas

Section 2 of the Sherman Act states:

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.

Despite this statutory language, the Antitrust Division of the US Department of Justice (DOJ) had not brought a criminal case under Section 2 since 1977 in United States v. Braniff Airways.¹ But in March 2022, DOJ announced its intention to revive criminal prosecutions for violations of Section 2, when former Deputy Assistant Attorney General for Criminal Enforcement Richard Powers stated on a conference panel that "[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."²

In April 2022, DOJ formalized this policy announcement by revising its policy and practice guides to address criminal Section 2 enforcement. First, DOJ revised the relevant section of the Justice Manual so that the manual expressly references criminal Section 2 enforcement.³ The updated Justice Manual now states that the Division "may also bring, and has brought, criminal charges under Section 2."⁴ DOJ also published updated Leniency Program FAQs, which explain that DOJ will not prosecute qualifying applicants for Section 2 violations that are "in furtherance of" the qualifying Section 1 violation that the applicant reports.⁵ DOJ then updated its Antitrust Primer for Federal Law Enforcement Personnel, which educates law enforcement personnel on how to detect and investigate criminal antitrust violations, to provide the elements of a Section 2 claim and an explanation of Section 2 conspiracies.⁶

DOJ acted on these policy changes when it announced in late October that it had obtained a guilty plea in its first criminal Section 2 case since Braniff.

US v. Zito

In a one-count information filed on September 19, 2022 in the US District Court for the District of Montana, DOJ alleged that Nathan Nephi Zito, owner and president of a paving and asphalt contracting business, violated Section 2 of the Sherman Act by attempting "to monopolize the markets for highway crack-sealing services in Montana and Wyoming by proposing that his company and its competitor stop competing and allocate regional markets."⁷ The case was the latest from DOJ's Procurement Collusion Strike Force, a multi-agency effort to detect...