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DOJ Breathes New Life into Section 2 Criminal Enforcement

March 8, 2022

With the passage of the Antitrust Procedures and Penalties Act (APPA) in 1974, Congress upped the stakes for violating the antitrust laws—changing criminal penalties from misdemeanors to felonies, with higher statutory maximums. For decades, criminal enforcement focused on per se violations of Section 1 of the Sherman Act (which include but are not limited to agreements or understandings between competitors as to prices or price levels, market/customer allocations, or bid rigging). But the Department of Justice (“DOJ”) recently signaled there may be change on the horizon for criminal enforcement of Section 2 violations, which are generally not considered per se offenses. This landmark announcement will likely raise significant questions and concerns for the business community and antitrust bar.

On March 2, Deputy Assistant Attorney General for Criminal Enforcement Richard Powers broke the news during a panel at the American Bar Association White Collar Conference in San Francisco. Powers stated that DOJ will use “all the tools available” in monopolization cases under Section 2. He went on to explain that “Congress made violations of the Sherman Act, both Section 1 and Section 2, a crime… and Section 2 is a felony just like Section 1… Historically, the division did not shy away from bringing criminal monopolization charges, and frequently alongside Section 1 charges, when companies and executives committed flagrant offenses intended to monopolize markets.” 

Although Powers claimed he was “not making any announcements” now, he made the Division’s position clear: “If 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.” 

As Powers noted, DOJ brought criminal cases under Section 2 in the past, although not since the 1970s. In United States v. Dunham Concrete Products, Inc., 475 F.2d 1241 (5th Cir. 1973), for example, the Fifth Circuit Court of Appeals affirmed the convictions of three corporate defendants and their part-owner and manager Ted F. Dunham, Jr. for attempting to monopolize trade in concrete products in violation of Section 2 of the Sherman Act. The corporate defendants were fined between $30,000 and $40,000; and Ted Dunham, Jr. was fined $30,000 and sentenced to six months in prison. And in 1974—in a prosecution against General Motors over an alleged conspiracy to monopolize the automobile fleet market—a district judge entered a judgment of acquittal, finding the government did not prove GM possessed “specific intent to monopolize.” United States v. General Motors Corps., 369 F.Supp. 1306, 1311 (E.D. Mich. 1974). 

Powers’ statement comes on the heels of Assistant Attorney General for the Antitrust Division Jonathan Kanter’s statement in January: “we and our law enforcement partners are committed to using every tool available to promote competition.”  Powers echoed and elaborated upon Kanter’s sentiment, stating that DOJ’s plan to use “all available tools” will inform “all aspects” of the Division’s work to deter “the worst, most flagrant types of anticompetitive conduct.” 

The apparent shift in the Division’s thinking about Section 2 offenses comes amid the Antitrust Division’s recent efforts to expand the scope of traditional criminal enforcement in Section 1 cases. Last year, DOJ brought the first-ever criminal charges against corporations and individuals for entering into so-called “no poach” agreements—agreements not to solicit the employees of competitors. Earlier this year, in United States v. DaVita, Inc., the court denied the defendant’s motion to dismiss the indictment, holding that “naked” no-poach agreements may be per se illegal.

With respect to prosecuting criminal cases under Section 2, DOJ faces additional challenges. It is DOJ’s policy to only bring criminal charges in cases involving per se offenses—like price fixing, bid rigging, and market allocation agreements—that “have been found to be unambiguously harmful.” Apart from the small subset of per se offenses, all other antitrust claims (including claims brought under Section 2) are evaluated under the “rule of reason.” Rule of reason analysis requires a court to weigh the procompetitive benefits of the conduct against its anticompetitive aspects before determining that the conduct is illegal. 

Prosecuting an individual or company for conduct that is not categorically illegal raises serious due process concerns and challenges for prosecutors. Criminal defendants are entitled to fair notice that their alleged conduct is illegal and—given the inherently open-ended nature of the rule of reason inquiry—they may successfully challenge the unpredictable application of the Sherman Act. Defendants in recent years have challenged the Sherman Act as “void for vagueness” (see, e.g., United States v. Aiyer, 470 F.Supp.3d 383, 402 n.23 (S.D.N.Y. 2020)). A Section 2 prosecution may serve as a ripe vehicle for Supreme Court review of the issue.

Powers’ announcement raises complex, high-stakes issues for the business community. Where there existed a bright line between criminal and non-criminal antitrust cases, that line appears to be blurring. O’Melveny retains robust resources, experienced advisors, and the knowledge to ensure our clients stay ahead of the changing antitrust landscape. Please reach out to any of our key contacts for more details.


This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Anna T. Pletcher, an O’Melveny partner licensed to practice law in California, Patrick Jones, an O’Melveny associate licensed to practice law in the District of Columbia and New York, and Damilola G. Arowolaju, an O’Melveny associate licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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