400 SUBSTANTIVE CHANGES Act attempts to monopolize would be to deny private parties the right to obtain treble damages for injuries resulting from such attempts. Section 4 of the Clayton Act provides that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws, may sue . . . and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee." The key words are "anything forbidden in the antitrust laws”, since the Supreme Court has held that no right to recover treble 'damages can result from allegedly anti-competitive conduct which is not proscribed by the antitrust laws. The "antitrust laws”, as used in Section 4 of the Clayton Act, are defined in Section 1 of that Act3 to include Section 2 of the Sherman Act. They do not, obviously, include the general attempts section of S.1, nor should Section 1 of the Clayton Act be amended to include in the definition of the antitrust laws a general attempts section in the new Criminal Code which deals principally with criminal activity having nothing to do with antitrust offenses. Thus, the effect of deleting from Section 2 of the Sherman Act attempts to monopolize would be to eliminate the right of private parties to sue for treble damages—a right which the Supreme Court has said is "not merely to provide private relief, but . . . to serve as well the high purpose of enforcing the antitrust laws."5 Imposing Criminal Liability For Violations Another substantial, and perhaps inadvertent, change in the antitrust laws is made in the Robinson-Patman and Clayton Acts by Sections 316(c) and 316(d), respectively, of the conforming amendments in S.1. Taking the Robinson-Patman Act first, Section 316(c) amends the last paragraph of Section 3 of the Robinson-Patman Act. That paragraph now provides a fine or imprisonment for "any person violating any of the provi 3Nashville Milk Co. v. Carnation Co., 355 U.S. 373 (1958), holding that a violation of Section 3 of the Robinson-Patman Act could not be redressed by treble damages because it was not part of the antitrust laws. 415 U.S.C. §12. 5Zenith Radio Corp. v. Hazeltine Research Inc., 395 U.S. 100, 130–1 (1969). sions of this section." 6 The language in the conforming amendments to S.1 would replace the quoted phrase with one providing criminal penalties for "any person violating any of the provisions of this Act." (Emphasis supplied.) Thus, while at the present time criminal penalties attach only to the violation of one section of the Robinson-Patman Act, the amendment would appear to make any violation of the entire act a criminal offense, including any violation of Section 2.7 This would mean that any price discrimination offense would carry with it criminal penalties, sweeping away the present distinction between those offenses in Section 2, where a price discrimination occurs without an express intent to injure a competitor, and those offenses in Section 3, where the price discrimination results from specific knowledge that a competitor cannot respond with equal concessions or "for the purpose of destroying competition or eliminating a competitor."8 Similarly, Section 316(d) of the conforming amendments to S.1 would amend the fourth paragraph of Section 10 of the Clayton Act. At the present time, the paragraph being amended provides criminal penalties for any common carrier, or director, agent, manager or officer of a common carrier, who "shall violate this section". (Emphasis supplied.) The proposed amendment provides for criminal penalties against "any person who violates this Act". (Emphasis supplied.) Thus, while at the present time there are provided criminal penalties for common carriers, and their agents who violate Section 10 of the Clayton Act, the proposed amendment would make the entire Clayton Act a criminal statute. Such an amendment would, for the first time, impose criminal penalties upon corporations-and on their responsible officers and directors-who enter into exclusive dealing contracts found to violate Section 3; who engage in mergers found to violate Section 7; or who serve as directors of two or more corporations which are found to be competitors in violation of Section 8.10 The inappropriateness of criminal sanctions for mergers, exclusive dealing contracts, interlocking directorates and price discrimination is apparent from the standard of illegality used in the sections creating those offenses-a standard phrased in terms of future probability. Section 2 of the Robinson-Patman Act (price discrimination), Section 3 of the Clayton Act (exclusive dealing contracts), and Section 7. of the Clayton Act (mergers) each condemns conduct only if the effect of such conduct 615 U.S.C. §13a. (Emphasis supplied.) 715 U.S.C. §13. 815 U.S.C. §13a 915 U.S.C. §20. 1015 U.S.C. §§14, 18 and 19, respectively. 402 SUBSTANTIVE CHANGES "may be substantially to lessen competition or tend to create a monopoly❞ in any line of commerce. Section 8 of the Clayton Act condemns a director who sits on the boards of two or more corporations who are competitors "so that the elimination of competition by agreement between them would constitute a violation of any of the provisions of any of the antitrust laws", including agreements violating Section 3 and Section 7 with their future. standards of liability. When the task is to determine what a result "may be" or whether conduct “tends" to create a prohibited condition, reasonable men may differ, and criminal penalties are singularly inappropriate. The history of bank mergers illustrates the problems involved in imposing criminal sanction for an action which is illegal only if it "may" substantially lessen competition or "tend” to create a monopoly. The Bank Merger Act of 1966 provided that any bank merger consummated before June 17, 1963 "shall be conclusively presumed not to violate" Section 7 of the Clayton Act.11 At least one of the mergers blessed by the Bank Merger Act had previously been held to be illegal by a District Court. 12 If the conforming amendments to S.1 had been law in the 1960's, the corporations involved in those mergers, and their responsible officers and directors, would have been liable to criminal prosecution for conduct which Congress later approved-and might well have been convicted before Congress could act. A further complication in making anti-competitive mergers (and other similar conduct) criminal offenses is that a merger, legal when it was consummated, may become illegal by reason of subsequent changes in the market. In United States v. duPont (General Motors),13 the Supreme Court permitted the Department of Justice in 1949 to attack duPont's pre-1920 acquisition of a 23 per cent stock interest in General Motors because “at the time of suit, there [was] a reasonable probability that the acquisition [was] likely to result in the condemned restraints".14 Whether there was a similar probability when the merger occurred is immaterial because "the Government may proceed at any time that an acquisition may be said with reasonable probability to contain a threat that it may lead to a restraint of commerce or tend to create a monopoly of a line of commerce.”15 Such a result is possible because no intent to lessen competition or create a monopoly is required for a Section 7 violation. In duPont, the Court stressed that: 11 Act of February 21, 1966, Pub. L. No. 89-356, §2(a) Stat. 7. 12 United States v. Manufacturers Hanover Trust Company, 240 F. Supp. 867 (S.D.N.Y. 1965). . 13353 U.S. 586 (1957). 14 Id. at 607. 15 Id. at 597. "The fact that all concerned in high executive posts in both companies acted honorably and fairly, each in the honest conviction that his actions were in the best interests of his own company and without any design to overreach anyone, including duPont's competitors, does not defeat the Government's right to relief. It is not requisite to the proof of a violation of §7 to show that restraint or monopoly was intended."16 Thus, one corporation may merge with another under market conditions which make the merger seem lawful. These conditions can then change and the government can charge that the merger violated Section 7 on the theory that, under the changed market conditions, it “may” (perhaps for the first time) substantially lessen competition or "tend" to create a monopoly. In duPont, this resulted only in civil remedies. If S.1 becomes law, it could result in criminal prosecutions for the corporations and their officers and directors. 17 Criminal Attempts, Conspiracies And 1. Attempts Both S.1 and S.1400 contain general sections dealing with criminal attempts, 18 and these sections apply to antitrust offenses.19 The standards set forth in both S.1 and S.1400-an intent to commit a crime plus conduct which corrobates this intent-would place in doubt the relevance of existing law which has been developed in antitrust litigation on a case-by-case basis over nearly a century. At the present time, in order to be convicted of an attempt to monopolize, it must be shown that there is a dangerous probability that the defendants will succeed in obtaining monopoly power.20 Before courts conclude that 16353 U.S. at 607. 17Indeed, standards of liability phrased in terms of "may" or "tend" make it so difficult for the prospective offender to determine where lies the line between the criminal and the permissible as to raise a question whether they are constitutionally vague when they become criminal offenses. See United States v. Harriss, 347 U.S. 612, 617 (1954) (a statute must be sufficiently definite “to give a person of ordinary intelligence fair notice that his contemplated conduct is forbidden by the statute"). 18§1-2A4 in S.1; §1001 in S.1400. 1951004 in S. 1400; 93 CONG. REC. S-569 (daily ed. Jan. 12, 1973, Vol. 119, No. 6) (Remarks of Senator McClellan). 20 American Tobacco Corp. v. United States, 328 U.S. 781, 785 (1946); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 207 (5th Cir. 1969); Hiland Dairy, Inc. v. Kroger Company, 402 F. 2d 967, 971 (8th Cir. 1968). 404 SUBSTANTIVE CHANGES there is a dangerous probability that an attempt to monopolize will succeed, the plaintiff has generally been required to show that the defendant had a significant share of the market in which the attempt to monopolize occurred.21 This requirement flows naturally from the fact that the crime being attempted-monopolization-can only occur in the context of a specific market.22 A dangerous probability of success might or might not be construed by future antitrust courts to be the same thing as the, “conduct which, in fact, corroborates his intent" required by Section 1001 in S.1400 and the "conduct constituting, in fact, a substantial step toward commission" of a crime required by Section 1-2A4 in S.1. There is certainly a real-perhaps even "dangerous"-probability that these new words will be construed to mean something different from the dangerous probability of success in a specific market which is required today for an attempt to monopolize conviction. The risk that a general attempts section would not incorporate this requirement when applied to attempts to monopolize is underscored by an examination of the examples given in Section 1-2A4 of S.1 for conduct which would constitute a "substantial step toward commission" of a crime. These examples include lying in wait for the victim; reconnoitering the place where the crime is to be committed; enticing the victim to a place where the crime is to be committed; entering a structure where the crime is to be committed; and possession or collecting material to be used in connection with the crime. These standards fit nicely with attempts to commit many common law crimes, such as rape, murder or robbery. They are wholly inapplicable to an attempt to monopolize. One can envision the prosecution offering evidence, in an effort to comply with these examples, that the incipient monopolist took substantial steps toward completion of its crime by lying in wait for its unfortunate competitor at the Metropolitan Club, by skulking about its headquarters office (the "structure" where the crime was to be committed) or "reconnoitering" the market through the use of market surveys and public opinion polls. It simply seems inappropriate to wipe away the standards which judges have developed over 83 years for determining when an attempt to monopo 21 Walker Process Equipment Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965); Bernard Food Industries, Inc. v. Dietene Co., 415 F.2d 1279, 1284 (7th Cir. 1969), cert. denied, 397 U.S. 912 (1970); Hiland Dairy, Inc. v. Kroger Company, 402 F.2d 968, 974 (8th Cir. 1968); contra, industrial Building Materials Inc. v. Inter-chemical Corp., 437 F.2d 1336, 1344 (9th Cir. 1970); Lessig v. Tidewater Oil Co., 327 F.2d 459, 474-5 (9th Cir. 1964), cert. denied, 377 U.S. 993 (1964). 22 United States v. Grinnell Corp., 384 U.S. 563 (1966); United States y. E.I. duPont de Nemours Co. (Cellophane), 351 U.S. 377 (1956). |