When the FBI Comes Calling…®
ANTITRUST (continued)
15 U.S.C. § 1 (2007).
The Crime
Under section 1, "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations," is illegal. 15 U.S.C. § 1 (2007). Therefore any person who makes such a contract, or engages in any such combination or conspiracy, is guilty of a felony. Id.
The Punishment
Punishment for a violation of section 1 is:
- a fine of not more than
- $100,000,000 if the violator is a corporation, or
- $1,000,000 if the violator is any other person; or
- imprisonment for not more than 10 years; or
- both, by the discretion of the court. Id.
Case Law Interpreting Section 1
Prosecutions under the antitrust laws are notoriously complicated and lengthy. The elements of an antitrust violation appear to be relatively straightforward. In a criminal case, the government must prove that the defendants entered into a contract, combination, or conspiracy; that this agreement "unreasonably" restrained trade; and that the restraint affected interstate commerce. See Reyn's Pasta Bella, LLC v. Visa U.S.A., Inc. 259, F. Supp. 2d 992, 997-98 (N.D. Cal. 2003) (elements as expressed in Federal civil case). Notice, however, that the case law that interprets section 1 has evolved over the years to include an "unreasonable" requirement to the restraint of trade component that is not in the statute. See Sitkin Smelting & Refining Co. v. FMC Corp. 575 F.2d 440, 446 (3d Cir. 1978) (although 15 U.S.C. § 1 prohibits "every" contract, combination, or conspiracy in restraint of trade, the law has been construed as precluding only such agreements which "unreasonably" restrain competition because every agreement restrains trade in some way). Furthermore, determining what constitutes contracts, combinations, and conspiracies has proven to be contentious, as has defining what exactly constitutes a restraint of trade.
Note: There are civil causes of action for violations of the antitrust statutes, so many of the cases that are cited on this page are from civil, as opposed to criminal cases. While McNabb Associates does not handle civil suits, the elements of a criminal case are almost always identical to the elements of civil case.
United States v. Nippon Paper Indus. Co., 109 F.3d 1 (1st Cir. 1997).
This case raised a question that, at that time, had not been answered: can a foreign corporation be convicted under the antitrust laws for price-fixing schemes that took place entirely in Japan? Nippon Paper at 2. The district court declared that it could not, and dismissed the indictment. Id. The government appealed and the Court of Appeals ruled that it could. Id. The defendant in this case, a Japanese corporation, was indicted under section 1 for agreeing with unnamed coconspirators to fix the price of thermal fax paper throughout North America. Id. The court noted that the Supreme Court, in Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993), permitted a civil antitrust claim under section 1, deeming it "'well established by now that the Sherman Act applies to foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States.'" Nippon Paper at 4 (quoting Hartford Fire at 796). The court then noted that "in both criminal and civil cases, the claim that [section 1] applies extraterritorially is based on the same language in the same section of the same statute. … It is a fundamental interpretive principle that identical words or terms used in different parts of the same act are intended to have the same meaning." Id. Therefore, "unless some special circumstance obtains in this case, there is no principled way in which we can uphold the order of dismissal." Id. at 6. The court did not find one. "Hartford Fire definitively establishes that [section 1] of the Sherman Act applies to wholly foreign conduct which has an intended and substantial effect in the United States. We are bound to accept that holding. Under settled principles of statutory construction, we are also bound to apply it by interpreting [section 1] the same way in a criminal case." Id. at 9.
Hester v. Martindale-Hubbell, Inc., 493 F. Supp. 335 (E.D.N.C. 1980) aff'd 659 F.2d 433 (4th Cir. 1981).
In this civil case, the plaintiff brought suit against the defendants arguing that they "conspired … to exclude him from advertising in the biographical section of the [Martindale-Hubbell] Directory and thereby unlawfully restrained interstate trade." Hester at 338. The court, mentioned the following "crucial factors" in determining what constitutes "'concerted activity' within the meaning of the Sherman Act:
- all members of the combination knew of the defendant's purpose to restrain trade;
- at least two members of the combination benefited by the restraint of trade and, in that sense, shared a common purpose in restraining trade;
- the agreement by two members of the combination actually restrained trade, as opposed to merely facilitating the restraint; and
- at least two members of the combination intended to restrain trade.
Id. at 338-339 (quoting Harold Friedman, Inc. v. Kroger Company, 581 F.2d 1068, 1073 (3d Cir. 1978).) In this particular case, the court found that the plaintiff "failed to present sufficient evidence of a conspiracy or concerted activity." 659 F.2d at 435.