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Reinvigorating Criminal Antitrust?

 |  January 3, 2019

Posted by Social Science Research Network

Reinvigorating Criminal Antitrust?

By D. Daniel Sokol (University of Florida)

Contemporary rhetoric surrounding antitrust in an age of populism has potential implications with regard to criminal antitrust enforcement. In areas such as resale price maintenance, monopolization, and Robinson-Patman violations, antitrust criminalization remains the law on the books. Antitrust populists and traditional antitrust thinkers who embrace a singular economic goal of antitrust push to enforce antitrust law that is already “on the books.” Under an economically informed lens, a natural extension of enforcement by the antitrust populists would be to advocate the use of criminal sanctions, outside of collusion, for various antitrust violations which are “on the books” but have not been used in over a generation.

A return of criminalization for noncollusion related antitrust abuses presents potential legal problems. Current antitrust jurisprudence and policy make a return to criminalization of various practices not merely problematic as a matter of optimal deterrence, but also unconstitutional as a matter of law. The antitrust policy of today bears little resemblance to that of the earlier era of criminalization for a wider variety of antitrust violations. The first issue is one of time. It has been at least a generation since criminal antitrust cases have been brought for noncollusion based cases. The nature of antitrust violations is also different today. Antitrust criminal cases of the earlier era that included criminal enforcement for noncollusive activity were misdemeanors rather than felonies. Further, antitrust economics had not pushed antitrust case law to its current state based on a goal of consumer welfare, which weighs the potential procompetitive benefit as a justification to pursue certain behavior. That is, behavior that was once per se illegal is now governed by a rule of reason that weighs both the pro- and anticompetitive effects with regard to civil liability. An economically informed rule of reason makes the use of criminal sanctions problematic.

These changes to antitrust policy in the past forty-plus years create the basis for a challenge to the reintroduction of criminal penalties for noncollusion antitrust cases. First, this Article introduces the criminal antitrust regime and places it in historical context. Then, the Article explores the transformation of antitrust policy starting from the 1970s, which shifted antitrust policy towards a singular efficiency based goal. This focus on economic effects has significant repercussions for criminal antitrust enforcement, as it limits the possible use of criminal sanctions for Sherman Act § 1 and § 2 violations as well as the Robinson-Patman Act. These limitations apply only in situations where there is no ambiguity that the restraints in question are clearly anticompetitive. In practice, this means that only express collusion fits such a situation.

Criminal enforcement of noncollusive antitrust activity that is per se illegal creates two potential constitutional law problems, which the next part of the Article explores. The first is a desuetude problem, and the second is a void for vagueness problem. As a matter of constitutional law, these two doctrines limit possible overreach by antitrust populists inclined to use existing law to “get tough” on antitrust violations. The final part offers concluding thoughts on how antitrust must promote consumer welfare and how law enforcement must bring cases that optimally deter anticompetitive conduct but must not bring cases that inhibit the sort of business risk taking that promotes consumer welfare.

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