Furthermore, the McClellan bill deletes that language of the Sherman Act Section 2 applicable to attempts to monopolize, at the same time that it includes attempts to monopolize within its general section on criminal attempts. This deletion would remove the right to bring a treble damage action for an attempt to monopolize, since it would no longer be included in one of the "antitrust laws" as defined in the Clayton Act. In addition to limiting a private party's rights for redress, this excision deprives the government of allies in its quest to prevent attempts to monopolize.9 B. Solicitations, "Conspiracies to Conspire," etc. Because the conspiracy section of the McClellan bill is superimposed on the present conspiracy provisions in the Sherman Act, 10 it would apparently be a crime under S. 1 to conspire to commit the crime of conspiring to restrain or monopolize trade!11 Moreover, the McClellan bill makes it a crime to intentionally request, command, induce or otherwise persuade another person to engage in conduct constituting, in fact, a crime.12 This would apparently make it a crime to solicit a conspiracy which restrains or monopolizes trade. As for conspiracies to conspire, it appears to me that such an animal is so remote from a restraint of trade that it would be inadvisable for the law to be vigilant against it. At best, it would consume more resources than it would be worth. With respect to solicitations, in addition to the 7S. 1, § 316 (a) (2) deletes the words "or attempt to monopolize" from the Sherman Act. § 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." (15 U.S.C. §15). "The "antitrust laws" as used in § 4 of the Clayton Act are defined in § 1 of that Act, 15 U.S.C. § 12, to include § 2 of the Sherman Act. I would not think they include the general attempts section of the McClellan bill. I also think it would be undesirable to include in the definition of "antitrust laws" a general section in the revised Criminal Code, since it deals primarily with criminal activity having nothing to do with antitrust offenses. 10 See S. 1, § 1-2A5; in contrast, S. 1400 provides that whenever a conspiracy to commit an offense is made an offense outside § 1002, it means criminal conspiracy as described in that section. S. 1400, §§ 1002, 1004. "I have not attempted in the text to analyze a similar problem which flows from the relationship of the criminal attempt and conspiracy sections in S. 1 (§§ 1-2A4 and 1-2A5) and the amendment of the Robinson-Patman and Clayton Acts that make violations of those statutes a felony. (§§ 316 (c) and 316 (d); see discussion of this change in Section II. of the text.) I think such a change, from civil violations to criminal offenses, was unintended. Nonetheless, the way the bill is now phrased, it could impose criminal penalties on persons for a conspiracy or attempt relating to offenses in these two Acts. 12§ 1-2A3 of S. 1 makes it a crime if a person intentionally "requests, commands, induces or otherwise endeavors to persuade another person to engage in conduct constituting, in fact, a crime." Although this section does specifically except criminal attempts from its application, no similar exception for criminal conspiracies exists. S. 1400 limits its solicitation provision (§ 1003) to certain specified crimes, such as treason, murder and trafficking in hard drugs. 422 AN EVALUATION OF SUBSTANTIVE CHANGES AND PENALTIES evidentiary problems posed in proving that one did occur, there would be the tremendously burdensome requirement of proving that the action which was solicited would have been illegal if completed—a bizarre form of incipient antitrust violation. II Imposing Criminal Liability For Violations The change in status of some acts-from mere antitrust violations to criminal offenses-has excited much comment.13 The McClellan bill would make any violation of the Clayton Act or the Robinson-Patman Act a felony. Today most sections of these statutes, such as Clayton Act 3, 7 and 8 and Robinson-Patman 2, carry no criminal sanctions. In my opinion, to impose them for illegal mergers, exclusive dealing contracts, interlocking directorates or price discrimination is most inappropriate. Criminal penalties do not make sense when the standard of illegality used in almost all the sections creating these offenses is phrased in terms of future probability and often involves complex economic analysis, every phase of which honest men can disagree over. III Elevating Antitrust Violations The conforming amendments to the McClellan bill make another significant change relating to penalties for antitrust criminal offenses. All violations of the Sherman Act are elevated to the status of felonies, as are all criminal violations of the Robinson-Patman and Clayton Acts, including those new 13§ 316 (d) (2) of the conforming amendments to S. 1 would amend the fourth paragraph of § 10 of the Clayton Act (15 U.S.C. § 20). 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 added.) The proposed amendment provides for criminal penalties against "any person who violates this Act." (Emphasis added.) Thus, while at the present time there are provided criminal penalties for common carriers and their agents who violate § 10 of the Clayton Act, the proposed amendment would make the entire Clayton Act a criminal statute. In a similar fashion, § 316 (c) amends the last paragraph of § 3 of the Robinson-Patman Act, a section which now provides a fine or imprisonment for "any person violating any of the provisions of this section." § 316 (c) would substitute the quoted phrase with one providing criminal penalties for "any person violating any of the provisions of this Act." (Emphasis added.) The amendment would appear to make any violation of the entire Robinson-Patman Act a criminal offense, and not just violations of § 3. criminal offenses which attained their criminal status by virtue of the conforming amendments. 14 A person convicted in the future would thus be a felon and subject to, inter alia, revocation of a state-granted license, discrimination in hiring, or loss of right to vote. 15 Also, the Department of Justice would be compelled to proceed in criminal cases solely by indictment, without having the option of proceeding by information. I doubt that such a change in status would substantially contribute to deterrence of antitrust violations. 16 Judges are now reluctant to impose criminal sanctions in the antitrust area at all, and making antitrust offenses felonies would probably aggravate their wariness. I also think it would be unfair to impose the status of felon on an offender of the antitrust laws. This is an area of the law in which the precise formulations of legal rules are difficult because of the changing circumstances and arrangements in the marketplace. I do believe that in certain areas, especially price-fixing and market allocations, there should be strenuous efforts to impose the maximum misdemeanor penalties on offenders. It is in such a policy, and not in making these crimes felonies, that the deterrent effect of the statute will get its bite. IV Changes In Criminal Penalties There are a number of additional fines, penalties and damages provided for in either the McClellan or Administration bills which should be given careful consideration, and which might be beneficial supplements to existing 14 See, e.g., §§ 316 (a) (3), 316 (c), 316 (d) of the conforming amendments to S. 1. “Elevation" (which is not really the proper word since such practices have not been crimes heretofore) of those practices in the Robinson-Patman and Clayton Acts (which are changed from civil violations to criminal offenses by the McClellan bill) is particularly objectionable. It is interesting to note that these conforming amendments make all antitrust violations Class E felonies, for which the prison term may not exceed one year. This is the same prison term presently provided in §§ 1-3 of the Sherman Act, § 3 of the Robinson-Patman Act, and § 10 of the Clayton Act. In addition, S. 1 leaves the fines for antitrust offenses at the same levels as at the present time. By contrast, S. 1400 would not change the penalties imposed for, or the misdemeanor classification of, antitrust offenses. (See § 2002 in S. 1400). While S. 1 does not therefore have greater stated penalties for antitrust offenses, it imposes in an indirect fashion more severe punishment by labeling those offenses felonies. 15 The collateral consequences of felony status are examined in The Collateral Consequences of a Criminal Conviction, 23 VAND. L. REV. 929 (1970). 16 See, Staff Survey, Comments on Proposals To Make Certain Anti-trust Violations Class C Felonies, Senate Committee on the Judiciary, Reform of the Federal Criminal Laws, Part 3, Subpart D, p. 3420. 424 AN EVALUATION OF SUBSTANTIVE CHANGES AND PENALTIES sanctions. Before I review some of these in more depth, I would say that, generally, such additions to the antitrust enforcers' arsenal need to be realistic and workable. A. Fines Related to the Offense Both the McClellan bill and the Administration bill would permit the trial court to impose an "alternative" fine on a corporation convicted of an antitrust offense in an amount which does not exceed twice the gain or benefit derived or twice the loss caused by the offense, whichever is greater. 17 The alternative fine in the McClellan bill is, however, severely limited by reason of a conforming amendment (Sec. 316(a)(1)) which states that the maximum fine for Sherman Act offenses shall be $50,000. The conforming amendment should be redrafted so that it is inapplicable to the alternative fine. One difference that should be noted between the two bills on this sanction centers around whether the gain derived or the loss caused, for purposes of doubling, is net or gross gain and loss. The Administration bill's double fine provision refers to gross figures, while the McClellan bill's, by only referring to "benefit" or "lcss," appears to refer to net figures. I endorse this sanction because I feel, as many do, that the present fine for antitrust offenses, $50,000, is far too low. Imposition of a fine tailored to the harm done by a criminal offender would, in my estimation, be a powerful deterrent. Of course, its deterrent effect would depend on how vigorously the Department of Justice pursues such a fine. Although I do not underestimate the difficulties in proving the relevant amount of loss caused or benefit gained under such a sanction, I do not think the proposal is inherently unworkable or unrealistic. In the last few years we have witnessed a dramatic increase in the number of treble damage actions as well as class actions. Their complexity rivals that of the factual issues that would 17S. 1, Sec. 1-4C1 (b) states: “In lieu of sentencing under subsection (a), an offender who has been convicted of an offense through which he derived pecuniary benefit or by which he caused personal injury or property damage or loss may be sentenced to a fine which does not exceed twice the benefit so derived twice the loss so caused." S. 1400, Sec. 2201 (c) provides: "In lieu of a fine imposed under subsection (b) or any other provision of law, a person who has been found guilty of an offense through which he directly or indirectly derived pecuniary gain, or by which he caused personal injury or property damage or other loss, may be sentenced to a fine which does not exceed twice the gross loss derived or twice the gross loss caused, whichever is the greater." One objection to these provisions has been that they would appear to be in addition to the treble damages right conferred by Section 4 of the Clayton Act. This could increase the liability of an antitrust offender from treble to quintuple damages, a penalty thought to be excessive. be litigated under these alternative fines. Moreover, the law of antitrust damages does establish some guide for judges and lawyers who would attempt to grapple with the disputes over loss caused or benefit gained, whether gross or net. Also, I do not read these bills as requiring the government to press for and prove the maximum amount of benefit or loss referred to in the bills. A less-than-maximum amount might be easier to prove, yet still retain a healthy sting for the wrongdoer and a stern warning to others of the consequences of violating the law. Finally, I have faith in the prosecutorial discretion lodged in the Antitrust Division and would expect that it would seek the alternative fine only in situations in which the conduct was so reprehensible and the harm done so important as to call for application of a very significant fine. B. Restitution At the same time I do favor a fine related to the offense, I do not feel it is necessary to supplement the treble-damage right contained in the Clayton Act with a section in the criminal code permitting the trial court to require any corporation or person convicted of an antitrust offense to make restitution to a person injured by the commission of the offense. This sanction is contained in the McClellan bill.18 It could ultimately subject the offender to sixfold damages, if we add to the restitution both the treble damages provided for by present law and the fine of twice the defendant's gain from the offense. I can imagine restitution in circumstances where no private right of action existed, or where the scales were tipped heavily in favor of defendants. But, in the area of antitrust, the treble damages remedy, taken together with the prima facie weight given to a litigated government decree and the tolling provision in the Clayton Act, 19 affords aggrieved parties with ample ammunition to secure justified damages. At the same time the defendant is not over-penalized.20 18S. 1. § 1-4A1 (c) (5). 19 Section 5 (a) of the Clayton Act provides, in part, that a final judgment or decree in any civil or criminal proceeding brought by the United States under the antitrust laws, to the effect that the defendant has violated such laws, shall be prima facie evidence against such defendant in an action or proceeding brought by any other party. Section 5 (b) provides, in part, that whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain or punish violations of the antitrust laws, the statute of limitations for private rights of action based in whole or in part on any matter complained of in the United States' proceeding under the antitrust laws is suspended during the pendency of, and for one year thereafter. 15 U.S.C. §§ 16 (a), 16 (b). 20 There is also the danger that if the restitution is made first, prior to the ordering of any treble damages, that the victim would be considered fully compensated for the injury to his business or property and there would no longer be the damages required for the victim to maintain a subsequent treble damage action. See Dean Foods Company v. Albrecht Dairy Company, 396 F.2d 652, 658-9 (8th Cir. 1968). |