The Ultimate Guide to Federal Antitrust Law

Violations of the federal antitrust laws can have serious consequences for both companies and individuals. While federal agencies like the U.S. Federal Trade Commission (FTC) will pursue civil enforcement action in some cases, antitrust violations frequently lead to white-collar criminal charges. These charges carry substantial fines and prison terms, and they can lead to bans from engaging in business and commercial activities as well.

As a result, business executives and others need to prioritize federal antitrust compliance. Here, is a guide to federal antitrust law from the white-collar defense lawyers at Oberheiden P.C.:

The Three Major Federal Antitrust Laws

As the U.S. Department of Justice (DOJ) explains, “[t]he Federal Government enforces three major Federal antitrust laws, and most states have their own. . . . [T]hese laws prohibit business practices that unreasonably deprive consumers of the benefits of competition, resulting in higher prices for products and services.” The three major federal antitrust laws are:

• Sherman Antitrust Act
• Clayton Act
• Federal Trade Commission (FTC) Act

1. Sherman Antitrust Act

The Sherman Antitrust Act (also known simply as the Sherman Act) is a federal law that Congress enacted in 1980 in an effort to curb a rise in anticompetitive market practices. This included, but was not limited to, efforts to monopolize industries in order to limit consumers’ options—thereby facilitating artificial price inflation.

Under the Sherman Act, market participants are prohibited from engaging in “unreasonable” restraints of trade. While this makes clear that not all restraints of trade are unlawful, it fails to provide meaningful guidance to companies and individuals contemplating transactions and other commercial activities that may walk the line of federal antitrust compliance.

Despite this, the consequences of violating the Sherman Act are severe. As the DOJ explains, “Sherman Act violations involving agreements between competitors usually are punished as criminal felonies. . . . Individual violators can be fined up to $1 million and sentenced to up to 10 years in Federal prison for each offense, and corporations can be fined up to $100 million for each offense.” The fines for Sherman Act violations can be even greater in some cases.

So, what does it take to comply with the Sherman Act and avoid felony prosecution? While there are several key aspects to Sherman Act compliance, companies’ and individuals’ compliance obligations broadly fall into two categories:

• Avoiding any transaction that constitutes an unreasonable “contract, combination, or conspiracy in restraint of trade;” and,
• Avoiding any transaction that may be characterized as “monopolization, attempted monopolization, or conspiracy or combination to monopolize.”

Importantly, while the Sherman Act was originally intended to prevent consolidation and monopolization in the industries that were prevalent in the 1970s and 1980s (including predominantly railroads), today the FTC and DOJ use the Sherman Act to pursue white-collar criminal charges against companies and individuals involved in all types of industries—including industries that didn’t yet exist when the statute was enacted. In recent years, the FTC and DOJ have used the Sherman Act to pursue charges against government contractors, franchising entities, internet service providers (ISPs), and other businesses for anticompetitive practices such as:

Price Fixing

The DOJ defines unlawful price fixing under the Sherman Act as “an agreement by two or more competing producers of a specific commodity, or competing providers of a particular service, in a defined geographic area, to raise, set or maintain prices for their goods or services.” Under the Sherman Act, the DOJ can (and does) pursue white-collar criminal charges for violations including (but not limited to):

• Agreements to use the same formula to calculate wholesale or retail prices
• Agreements to raise prices by a certain amount or offer uniform price discounts
• Agreements not to advertise prices
• Agreements to eliminate discounts for certain customers
• Agreements on freight charges and other conditions of sale

Bid Rigging

Bid rigging violations of the Sherman Act involve agreements or arrangements “to determine the successful bidder in advance of a bid letting at a price set by the successful bidder.” These violations can take several forms. For example, the DOJ notes that it will prosecute companies and individuals for bid rigging practices such as:

• Agreeing that companies will submit “complementary bids” above the bid winner’s price
• Agreeing that companies will not bid on a particular contract
• Agreeing to rotate bid opportunities
• Agreeing to allocate bid opportunities based on geographic location
• Agreeing to grant subcontracts to complementary bidders

Market Allocation

Other types of market allocations violate the Sherman Act as well, and these allocations can also lead to white-collar criminal charges. With regard to non-bidding-related market allocation, the DOJ focuses its enforcement efforts in two primary areas:

• Horizontal Customer Allocation – This Sherman Act violation involves competitors agreeing that “each will service certain designated customers or classes of customers and will not attempt to compete, or will limit the manner in which they will compete, for the business of customers allocated to a competitor.”
• Territorial Allocation Agreements – This Sherman Act violation involves competitors agreeing that they will “solicit or service customers only within a certain geographic area.”

2. Clayton Act

Enacted in 1914, the Clayton Act prohibits mergers, acquisitions, and other corporate transactions that are likely to have a negative impact on competition in the marketplace. While the Clayton Act only includes provisions for civil enforcement, investigations initiated under the Clayton Act may lead to findings of Sherman Act violations; and, as a result, companies and individuals targeted in these investigations must address the very real possibility of facing criminal prosecution.

Recently, the DOJ has focused its enforcement efforts under the Clayton Act on Section 8. For example, on March 9, 2023, the DOJ issued a press release announcing that the Department’s Antitrust Division is “continu[ing] to focus on competitors sharing company directors in violation of Section 8 of the Clayton Act.” As the DOJ notes in the release, “Section 8, which Congress made a per se violation of the antitrust laws, prohibits directors and officers from serving simultaneously on the boards of competitors, subject to limited exceptions.” Again, although violations of Section 8 are not criminal in nature, the suspect nature of these violations will trigger criminal scrutiny in many cases.

3. Federal Trade Commission (FTC) Act

Similar to the Clayton Act, the FTC Act only includes provisions for civil enforcement. However, as the FTC notes, “[t]he Supreme Court has said that all violations of the Sherman Act also violate the FTC Act.” As a result, FTC Act violations can trigger criminal prosecution under the Sherman Act and the FTC and DOJ often work together to target both companies and individuals.

Additionally, it is important to note that while Sherman Act violations also violate the FTC Act, the FTC Act’s scope is much broader than that of the Sherman Act. As a result, FTC investigations can target a variety of other violations as well—and these violations can carry both civil penalties under the FTC Act and criminal penalties under other federal statutes. As the DOJ notes, it often uses a multitude of other statutes to pursue criminal charges in federal antitrust cases, including the statutes that establish general offenses such as making false statements to federal agencies (i.e., the FTC), perjury, obstruction of justice, conspiracy to defraud the United States, mail fraud, and wire fraud.

Defending Against Federal White-Collar Antitrust Charges

White-collar prosecutions under the federal antitrust laws are often exceedingly complex. Not only are the statutes themselves complex and subject to the interpretation of an extensive body of case law, but the facts at issue in federal antitrust cases tend to involve complex and nuanced data, transactions, and contracts as well. As a result, defending against federal white-collar antitrust charges requires an informed and strategic defense, and targeted companies and individuals must work with highly experienced federal defense counsel.

As price fixing, bid rigging, and market allocation allegations under the Sherman Act necessarily involve two or more unrelated commercial parties, the terms of the parties’ relationship (if any) are often key facts in these cases. Company representatives and other individuals must be extremely careful to avoid incorrectly and inadvertently classifying their commercial relationships, and their defense counsel must be able to correctly apply the law to the relationship (or relationships) at issue. Their defense counsel must be able to use statutory, constitutional, and other protections to appropriately shield potentially damaging corporate documents as well; and, when necessary, targeted companies’ and individuals’ defense counsel should be capable of effectively negotiating with the DOJ’s prosecutors.

We hope you’ve found this guide to federal antitrust law useful; and, if you or your company is facing scrutiny from the FTC and DOJ, we hope it will help you make some informed decisions. If you need to speak with a federal white-collar defense lawyer, we encourage you to contact us promptly for a complimentary consultation.

Request a Complimentary Consultation at Oberheiden P.C.

At Oberheiden P.C., we represent companies and individuals nationwide in all federal white-collar defense matters. This includes criminal investigations and prosecutions involving alleged federal antitrust violations. To speak with a senior federal defense lawyer at Oberheiden P.C. in confidence, call us at 888-680-1745 or contact us online today.