In a 2021 Executive Order on Promoting Competition in the American Economy, President Biden referred to antitrust as the “first line of defense against the monopolization of the American economy.”  Now—in the parlance of a time-honored coaching cliché—the Administration is strengthening that defense by going on offense.

During remarks at two recent American Bar Association conferences—the White Collar Crime National Institute in early March and the Antitrust Law Spring Meeting last week—the Antitrust Division of the Department of Justice said it intended to bring new criminal monopolization cases under Section 2 of the Sherman Act.  The Division has not minced words while staking this aggressive course.  Deputy Assistant Attorney General Richard Powers said  the Division “absolutely” intended to bring criminal prosecutions under Section 2.[1]  And Jonathan Kanter, the recently appointed head of the Division, confirmed the shift in policy by reiterating the Division’s power to bring such prosecutions under the statute and simply telling those looking for further guidance to “read the cases.”  Although there is no question that the Sherman Act allows for criminal penalties,[2] that statement was somewhat surprising given the complete lack of criminal enforcement in this area over the past several decades.  The Division has not indicted anyone under Section 2 since the 1970s, so these pronouncements mark a significant change in U.S. criminal antitrust enforcement, which had remained fairly consistent for the past 50 years.

Perhaps this should not come as too much of a surprise.  There has been a groundswell of bipartisan political support for increased antitrust enforcement, and, as one antitrust scholar recognized in 2019, “the populist resurgence in antitrust, taken to its logical conclusion, would be to ‘reinvigorate’ antitrust law with criminal prosecutions for conduct via statutory antitrust law that is already available and which technically still remains good law.”[3]  In January 2022, Kanter decried “a dearth of Section 2 case law” and promised that the Division would litigate more cases rather than settle, including by taking “risks and ask[ing] the courts to reconsider the application of old precedents to [modern] markets.”  Bringing criminal monopolization charges would be consistent with the Division’s aggressive posturing and apparent desire to revive an approach to antitrust that had fallen out of vogue.  Alas, the Biden Administration’s journey back to the antitrust future continues apace.

Given the lack of recent criminal monopolization prosecutions, however, this policy shift raises serious constitutional questions concerning due process, fair notice, and burdens of proof.  This blog post will first set the table with some historical and legal context concerning criminal antitrust enforcement and then identify and discuss some of the legal and policy issues raised by potential criminal monopolization prosecutions.

A (Very) Abridged Historical Summary of Criminal Antitrust Enforcement

Since the enactment of the Sherman Act in 1890, criminal enforcement of the statute has focused mostly on collusion and cartels under Section 1, which prohibits contracts and agreements that unreasonably restrain trade.  There are many reasons for this focus on collusion.  One is that this type of conduct is considered inherently anticompetitive and therefore per se illegal i.e. prohibited without regard to its actual effect on the market or any potential economic justifications.  The Division’s use of its limited prosecutorial resources has focused on the most egregious conduct, which includes price fixing, bid rigging, and market allocation. Another reason is that a policy choice was made to avoid deterring potentially procompetitive business conduct and encouraging businesspeople to be more risk averse.  In other words, the policy has been to avoid over-criminalizing business behavior on the theory that, at the margin, it is better to avoid curtailing such behavior than discouraging lawful, procompetitive behavior.  As the U.S. Supreme Court has recognized, possessing monopoly power and charging monopoly prices are not inherently illegal.  To the contrary, “it is an important element of the free-market system” because it “attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth.”[4]

Although cartels have been the predominant focus of criminal antitrust enforcement, there were times when criminal enforcement focused on non-collusion offenses (e.g., monopolization and resale price maintenance under the Robinson-Patman Act) as well, particularly in the middle of the 20th Century.  Even during that time, however, criminal penalties were limited mostly to fines, not imprisonment, and imprisonment generally was reserved for cases that involved violence.[5]  In the 1970s, Congress increased the penalties for criminal antitrust violations, turning what had—for eighty years—been misdemeanors into felonies.  Increased criminal penalties may have reflected political concern about anticompetitive conduct, but criminal prosecutions outside the context of collusion remained rare.  Indeed, unilateral conduct has “not generally been regarded as suitable for criminal prosecution,” and the Division has not brought a criminal Section 2 case since the mid-1970s.[6]  If the aforementioned recent pronouncements are any indication, the Division’s singular focus on collusion may be coming to an end.

Criminal Monopoly Charges Would Raise Legal and Economic Questions

Section 2 of the Sherman Act prohibits monopolization, attempted monopolization, and conspiracy to monopolize.  See 15 U.S.C. § 2.  Proving monopolization requires a showing of “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”[7]  Proof of the first element alone is not sufficient because, as noted above, monopoly power is not illegal by itself.[8]

From this formulation of the elements of monopolization, one thing that jumps out as different from a per se case under Section 1 for illegal price fixing, bid rigging, or market allocation is the requirement of market power, which presupposes that the government would have to plead and prove a relevant antitrust market with geographic and product components, and that the defendant possessed the mens rea required to monopolize that antitrust market.  Doing so would be no small feat.  In civil cases brought under Section 2 and non-per se Section 1 cases adjudicated under the rule of reason, proving a relevant market and market power usually requires in-depth analysis of the specific facts of a given case, bolstered by the expert testimony and opinions of an economist.  The same would be true in a criminal case. Accordingly, the level of legal and economic analysis required to assess the propriety of the conduct at issue in a monopolization case is heightened compared to a per se Section 1 case.

The necessity of such a fact-intensive inquiry by itself suggests that monopolization cases may not be appropriate for criminal prosecution and raises constitutional concerns concerning fair notice.  A federal criminal statute must be “reasonably clear . . . that the defendant’s conduct was criminal” at the time it was committed.[9]  Because monopolization has not been charged criminally for 50 years, this lack of usage could bolster arguments based on desuetude (which basically means “use it or lose it”) and due process.[10]  Further, the lack of criminal monopolization cases—and the government’s long-standing position that it would not enforce Section 2 criminally—could lend itself to an argument that the void-for-vagueness doctrine prohibits criminal prosecutions under Section 2 because of the lack of fair notice.[11]  The illegality of conduct subject to the rule of reason may not be certain enough to justify criminal proscription through federal common law.  Finally, it is questionable whether a rule-of-reason inquiry could apply in a criminal case, given the beyond-a-reasonable-doubt standard and the burden of proof resting at all times with the government.  For example, could a court shift the burden to a criminal defendant to prove procompetitive benefits?

* * *

Expanding criminal enforcement raises interesting legal questions of constitutional law and interesting practical ones regarding how such a case would be proved in court.  One thing is clear – the enforcement landscape is changing radically and rapidly.  Whether these enforcement efforts will actually change antitrust law is yet to be seen and will be decided in the courts.  We should brace ourselves for the ride and remain vigilant to court decisions on these issues.

[1] Michael Acton, US DOJ stands ready to bring criminal charges in Section 2 monopolization cases, Powers says, MLex, Mar. 2, 2022 (available at https://mlexmarketinsight.com/news/insight/us-doj-stands-ready-to-bring-criminal-charges-in-section-2-monopolization-cases-powers-says).

[2] 15 U.S.C. § 2 (“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize . . . shall be deemed guilty of a felony” subject to fine and imprisonment up to ten years.).

[3] D. Daniel Sokol, Reinvigorating Criminal Antitrust?, 50 Wm. & Mary L. Rev. 1545, 1549, available at https://scholarship.law.wm.edu/wmlr/vol60/iss4/12.

[4] Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004).

[5] Sokol, supra, at 1571 (“[T]he total number of incarcerations for monopolization in the history of the Sherman Act is incredibly rare and has not been a part of antitrust life for more than a generation.”)

[6] Donald I. Baker, The Use of Criminal Law Remedies to Deter and Punish Cartels and Bid-Rigging, 69 Geo. Wash. L. Rev. 693, 695 (2001).  Baker cites United States v. Empire Gas Co., 537 F.2d 296 (8th Cir. 1976), as the last case where the Division brought a Section 2 case, noting that “the government lost on the ground that it failed to show a dangerous probability that the defendant would succeed in monopolizing the relevant markets,” even though violent conduct (blowing up competitors’ vehicles) was involved.  Id. at 695 n. 14.  See also Sokol, supra, at 1557.

[7] United States v. Grinnell Corp., 384 U.S. 563, 570­71 (1966).

[8] Verizon, 540 U.S. at 407.

[9] United States v. Lanier, 520 U.S. 259, 267 (1997).

[10] Sokol, supra, at 1564 (“Desuetude is a concept where a practice that has bene fixed by law loses its authority due to a lack of usage.”), 1573 (arguing that “a revival of criminal enforcement for Sherman Act violations that are noncollusive are desuete and not valid as statutes for further criminal enforcement”).

[11] Id. at 1577 (“[W]hen the government charges price-fixing, the clarity of the prohibition and the long line of cases have permitted courts to overlook what is a federal common law prohibition in a regime where there is supposedly no federal common law of crime.  The nature of the rule of reason inquiry does not easily lend itself to this criminal standard.  Going beyond this core prohibition would raise grave (and probably winning) due process challenges under the void for vagueness doctrine.”).

Photo of Mark R. Butscha, Jr. Mark R. Butscha, Jr.

Mark is an antitrust lawyer whose practice focuses on merger control, including filings under the Hart-Scott-Rodino (HSR) Act and similar “merger control” laws around the world. Mark has represented clients in merger investigations by the U.S. Department of Justice and Federal Trade Commission.

Mark is an antitrust lawyer whose practice focuses on merger control, including filings under the Hart-Scott-Rodino (HSR) Act and similar “merger control” laws around the world. Mark has represented clients in merger investigations by the U.S. Department of Justice and Federal Trade Commission. Mark recently completed a secondment with a global power management company where he served as in-house competition counsel. He also is an experienced litigator who has represented clients in state and federal trial and appellate courts, arbitration tribunals, and administrative proceedings involving antitrust, competition, and other complex claims, including class actions. He has argued appeals before the U.S. Court of Appeals for the Sixth Circuit and the Ohio Court of Appeals and represented clients in appeals before other appellate courts, including the New York Court of Appeals and the U.S. Court of Appeals for the Ninth Circuit. Mark also has represented companies and individuals facing criminal inquiries and investigation. He is an active participant in the firm’s pro bono practice.