Penalties for Violating Antitrust Laws

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 Who Has the Authority to Enforce Antitrust Laws?

The Federal Trade Commission (FTC) and the United States Department of Justice (DOJ) share the authority to enforce antitrust laws. The FTC has the authority to file an antitrust lawsuit either in federal court or at an administrative hearing.

Only the DOJ has the authority to bring charges under the Sherman Act, the main antitrust law. In addition, under the Hart-Scott-Rodino Act, state attorney generals can file an antitrust lawsuit in state or federal court.

What Role Do State Antitrust Laws Play?

Most states have their own antitrust laws. They are similar to federal antitrust laws, which allow private individuals to sue businesses that engage in anticompetitive behavior.

Although the state and federal antitrust laws are fundamentally the same, the specific provisions in each state code may differ greatly. Some antitrust statutes closely resemble the text of the federal antitrust legislation.

Statutes in other states incorporate parts of the federal antitrust legislation. These statutes may specify specific categories of forbidden conduct.

Other state statutes may cover completely different issues. In terms of the types of activity that are considered illegal, state antitrust laws will frequently cover more issues than federal antitrust statutes.

The state court’s interpretation of state antitrust legislation often, but not always, reflects the interpretation of federal antitrust laws.

What Is an Antitrust Violation?

There are numerous ways in which businesses may engage in violations of antitrust laws. Courts will use a per se infraction criteria to investigate potential antitrust violations.

The only thing that must be established in court under this framework is that the party accused of antitrust crimes committed one of many “per se offenses.” The intent of the accused and the consequences of their actions are irrelevant.

Examples of typical and more common antitrust violations include the following:

  • Price fixing;
  • Lockup agreements;
  • Concerted refusals to trade; and
  • Mergers in which the primary and only competitor is dissolved

Other examples of antitrust laws being violated include the following:

  • Significant price variations when products are substantially similar;
  • Suspicious claims made by the seller;
  • A business receiving low bids for all contracts; and
  • Significant and unjustified financial differences between bids.

What Are Penalties for Violating Antitrust Laws?

The penalties for violating antitrust laws may include criminal and civil penalties. The penalties that a violator may face include:

  • For a violation of the Sherman Act, an individual may be fined up to $350,000 and sentenced to up to 3 years in prison;
    • Companies may face fines of up to $10 million;
  • For a violation of the Clayton Act, an individual who was injured by an antitrust violation may sue the violators in court for three times the amount of damages they suffered;
    • These are referred to as treble-damages;
    • These damages may also be sought in class-action antitrust lawsuits;
    • Damages may also include attorney’s fees and other costs associated with the lawsuit;
  • When there is a violation of the Federal Trade Commission Act, the FTC has the authority to issue an order the violator to stop engaging in the anticompetitive practices; and
  • Violations of state antitrust laws often prohibit the types kinds of conduct as federal antitrust laws;
    • Because of this, the penalties state laws impose are often similar and may range from criminal charges to civil sanctions.

Does the Sherman Act Apply to All Businesses?

The United States Constitution limits the application of the Sherman Act to any activities related to interstate commerce. These activities may include local businesses and transactions that affect interstate commerce.

The Sherman Act is broadly interpreted to protect consumers from monopolistic activities.

What Was a Consequence of Violating the Sherman Antitrust Act?

A violator may face significant penalties for violating the Sherman Act. It is a felony for a corporation or an individual to monopolize any part of interstate trade or commerce.

Other activities are also included, such as attempts to monopolize or conspire to monopolize trade. If the individual is convicted, they may face fines of up to $350,000 and a prison term of up to three years.

Corporations may face fines of up to $10,000,000. In addition, the federal government has the power to seize any property that was related to the unlawful trade practice.

What Is a “Rule of Reason” Antitrust Violation?

Under many state laws, the laws that govern unfair competition are considered because almost any business action may be considered unfair competition. Because of this, many state courts have started to use a rule of reason analysis.

When the court uses this analysis, the motives of the accused wrongdoer, and the utility of their conduct, are considered against the gravity of the harm that occurred to the alleged victim.

How Do Business Practices Affect Antitrust Laws?

The Sherman Act includes a large amount of antitrust law. Under this federal law, “monopolization, attempted monopolization, conspiracy or combination to monopolize,” and “any contract, combination, or conspiracy in the hindrance of trade” are prohibited.

The U.S. Supreme Court, however, ruled that only excessive trade restraints on commerce are prohibited by the Sherman Act, not all restraints on commerce. Trade restrictions that are considered unreasonable include the following:

  • Compelling an individual to stop operating a business or make changes to it to avoid competition;
  • Attempting to fix prices to drive out other businesses;
  • Monopolizing a market;
  • Creating non-compete clauses or other contractual restrictions to prevent competition; and
  • An individual’s freedom to conduct business being harmed by malicious interference with a contract or commercial arrangement.

What Antitrust Laws Are Relevant to the Healthcare Sector?

In the past decades, antitrust regulations have recently been adopted for the healthcare sector. Before the 1970s, the learned professions, such as medicine and law, were largely exempt from antitrust legislation.

The field of medicine, however, developed into a widespread national service. In 1975, the Supreme Court held that the practice of medicine and other learned professions are covered by antitrust law.

In Antitrust Lawsuits, How Is Expert Testimony Used?

In an antitrust lawsuit, both parties must provide expert economic testimony to prove or refute culpability and damages in nearly all antitrust litigation. If the plaintiff or the defendant can prohibit the other side’s expert from testifying, their case will be significantly weakened.

Expert testimony is often used in antitrust cases to demonstrate how a defendant’s alleged actions hampered economic competition. In other words, the plaintiff’s expert has to testify regarding how the market would have been if the defendant’s conduct had not occurred.

On the other hand, the expert for the defendant has to testify about how the market would have been the same regardless of the defendant’s conduct.

How Do Experts Get Qualified to Testify in Antitrust Cases?

In 1993, the United States Supreme Court ruled that before providing scientific expert testimony to the jury, the trial judge must establish that it is relevant and credible. In 1999, this rule was broadened to apply to all expert witnesses, including expert economic testimony in antitrust litigation.

Because these court decisions have raised the bar for the competence of expert witnesses, it is now easier for parties to dismiss experts on the other side as unqualified.

Do I Need a Business Attorney?

If you have any issues, questions, or concerns regarding violations of antitrust laws, it is important to consult a business lawyer. The laws that govern antitrust violations are complex, and the penalties for violating these laws may be severe.

If you have an issue involving antitrust laws, your attorney can advise you regarding what laws apply and what penalties you may face, if any. Your attorney can explain these complex laws and assist you with defending yourself or your company in court.


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