Author: Jon Cieslak
The U.S. Department of Justice Antitrust Division made waves recently by indicating that it is prepared to bring criminal charges for illegal monopolization, something it has not done in over 40 years.
Speaking at the American Bar Association’s National Institute on White Collar Crime on March 2, Deputy Assistant Attorney General Richard Powers said that, while he was not “making any announcements,” the Antitrust Division was “absolutely” prepared to bring Sherman Act, Section 2 criminal charges. He noted that Congress made violations of both Section 1 (which addresses anticompetitive agreements) and Section 2 a crime, and that the Antitrust Division has previously brought Section 2 charges alongside Section 1 charges “when companies and executives committed flagrant offenses intended to monopolize markets.”
If the Division does bring Section 2 charges, it will not lack for statutory authority. Section 2 of the Sherman Act expressly makes it a felony 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.” 15 U.S.C. § 2.
But with a dearth of previous Section 2 prosecutions—which were usually brought with Section 1 claims in any case—it is hard to know what monopolization conduct the Division might prosecute. After all, the Division does not prosecute all violations of Section 1; it only prosecutes per se violations such as price fixing, bid rigging, and some market allocation agreements, not other anticompetitive agreements that are judged under the rule of reason. Section 2 violations, however, are not so neatly compartmentalized into per se and rule of reason violations.
This could lead defendants to challenge any forthcoming Section 2 charges on Due Process grounds because the statute is unconstitutionally vague about what conduct is illegal. Indeed, some have argued that Section 1 is vulnerable to this same attack—even though courts have substantial experience with Section 1 criminal cases.
The Antitrust Division previously dealt with this potential problem in a different context. When the Division announced that it would begin prosecuting wage fixing and no poaching agreements, which it previously had not prosecuted, it issued guidance to HR professionals about what conduct the Division would prosecute. This approach has been successful so far, as the only court to consider the issue has ruled against a constitutional challenge to the Antitrust Division’s prosecution of a wage fixing agreement.
Only time will tell whether the Antitrust Division will pursue a similar strategy here and issue guidance about the standards it will apply to its charging decisions under Section 2. Or perhaps this is much ado about nothing, and Mr. Powers was only responding to a specific question and making sure not to undermine the DOJ’s power to proceed under Section 2. In the meantime, it is especially important for companies to obtain sound antitrust legal advice to address the myriad ways they could engage in illegal monopolization conduct.