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Right on Crime | April 5, 2012
At times, prosecutors have used the Sherman Antitrust Act for regulation via criminal penalty. The Act, as it stands today, begins:
“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 declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.”
Originally passed in 1890, the Act was intended to give the federal government the power to criminally prosecute monopolies and cartels. Far too often, however, it is used without evidence of traditional monopolistic behavior or illegal cartel actions, and is instead aimed at large corporations whose successes create a high bar for other market entrants (see, e.g., United States v. Microsoft).
With a hefty criminal penalty looming—one million to one hundred million dollars, or ten years in prison, or both—it is essential that antitrust law only regulate those activities constituting a truly criminal “restraint of trade,” while not sweeping up mere market dominance or superior innovation in its path.
To that end, legislation was recently introduced in Congress that would make explicitly clear that the Sherman Antitrust Act does not involve voluntary economic associations, agreements, or cooperation. Such limiting legislation might ensure that criminal penalties are narrowly focused on the economic activity intended to be prohibited, and do not too broadly inhibit marketplace growth and self-selection.