PUBLIC & PRIVATE ENFORCEMENT OF THE ANTITRUST LAWS by Barry J. Lipson

PUBLIC & PRIVATE ENFORCEMENT
OF THE
ANTITRUST LAWS*
by Barry J. Lipson**
CONTENTS
PREFACE
I.
'28:01.
II.
'28:02.
'28:03.
'28:04.
'28:05.
'28:06.
III.
'28:07.
'28:08.
'28:09.
'28:10.
'28:11.
'28:12.
'28:13.
'28:14.
'28:15.
'28:16.
IV.
'28:17.
'28:18.
'28:19.
'28:20.
'28:21.
'28:22.
'28:23.
'28.24.
'28:25.
'28:26.
'28:27.
'28:28.
SCOPE OF ANTITRUST LAWS [FROM 1996 CHAPTER 27 DRAFT*]
SCOPE OF ENFORCEMENT
In General.
SHARED FEDERAL AUTHORITY & COOPERATION [1996-7 CHAPTER 28 DRAFT*]
Generally.
Premerger Notification.
Liaison Agreement.
Domestic Cooperation.
International Cooperation.
DEPARTMENT OF JUSTICE, ANTITRUST DIVISION
Role and Philosophy.
Business Review Procedure.
Informal Investigations.
Civil Investigative Demand.
Amnesty and Cooperation.
Grand Jury.
Criminal Prosecutions.
Antitrust Sentencing Guidelines.
Perjury and Obstruction of Justice.
Government Civil Case.
FEDERAL TRADE COMMISSION
FTC Advisory Opinions.
Special Reports and Questionnaires.
Access to Business Records.
Subpoena of Witnesses and Documents.
Unfair and Deceptive Practices Trade Regulation Rules.
Industry Trade Practice Rules and Guides.
Prehearing Cease and Desist Procedures.
Cease and Desist Complaint Hearing.
Cease and Desist Judgment and Review.
Cease and Desist Compliance Procedures.
FTC Civil Enforcement Actions.
FEDERAL ENFORCEMENT ACTIVITY
V.
'28:29.
'28:30.
'28:31.
'28:32.
STATE ATTORNEYS GENERAL
VI.
'28:33.
In General.
PRIVATE CIVIL ANTITRUST ACTIONS
VII.
'28:34.
'28:35.
'28:36.
'28:37.
'28:38.
'28:39.
VIII.
Justice Department, Antitrust Division.

Federal Trade Commission.
Federal Merger Activity.
Trade Associations.
Treble Damage Actions.

Class Actions.
RICO Claims.
State Direct Purchaser Statutes.
Private Injunctive Relief.
Prosecuting Private Actions.
ANTITRUST COMPLIANCE PROGRAMS
'28:40.
In General.
'28:41.
Greetings from the Federal Pen.
___________________________________________________
*Original 1996-7 drafts of Chapter 28 (and Chapter 27) of Advising Small Businesses (ASB), written by
Barry J. Lipson, and significantly adapted from his prior writings, including copyrighted writings such as
various issues, published and unpublished, of his "copyrighted column Corplaw Commentaries." It is
archived here to preserve and for historical prospective, not for legal or business reliance, for which the
current version of ASB should be reviewed and referenced, and legal counsel consulted, as appropriate.
**Barry J. Lipson, B.S. in Economics, Wharton School, University of Pennsylvania (1959), J.D.,
Columbia Law School (1962), LL.M., in Trade Regulation, New York University Graduate School of
Law (1968); Member of the New York Bar since 1962 and the Pennsylvania Bar since 1970; Weisman
Bowen & Gross, Pittsburgh, Pennsylvania. Portions of this chapter have been adapted from published
and unpublished editions of the author's copyrighted column Corplaw7 Commentaries, to which all
rights are reserved and retained by the author [1996-97].
PREFACE*
I.
SCOPE OF ANTITRUST LAWS

A. 27:01 In General
The antitrust laws are of serious concern to all persons engaged in business, whether they
be engaged in small or large businesses, whether they be corporations, partnerships, joint

ventures or sole proprietorships. This chapter examines the background and purposes of the
antitrust laws and provides an overview of these laws for business advisors and entrepreneurs.
The purposes and objectives of the antitrust laws are to preserve, protect, and facilitate
the operation of our free enterprise system; provide the "rules of the game" or necessary checks
and balances for the business community; and protect and benefit the consumer. These laws
have been enacted in almost every state of the union, and in one form or another existed prior to
the enactment in 1890 of the Sherman Act, the initial federal antitrust law. Many foreign nations
also have their own antitrust laws.++1>
While all business transactions are subject to scrutiny under these laws, certain types of
transactions have already been "prejudged" to be per se illegal. They include price fixing
between competitors, price fixing between suppliers and re-sellers, bid rigging and
complimentary bidding, output and production limitations, customer and product allocations,
market and territorial divisions, tie-in and tying arrangements involving sufficient economic
power, and commercial group boycotts and concerted refusals to deal. One court has even found
that, as sham litigation has no redeeming value, when brought against competitors it is a "per se"
violation of the antitrust laws.++2>
All other business transactions that are not obviously covered by the "per se" rule, are
evaluated under the "rule of reason" to determine whether the transaction is reasonable in light of
the purposes and objectives of the antitrust laws. For example, a football league's policy of
restricting team owners from selling shares in their teams to members of the public was found to
4
be in restraint of trade, under the "rule of reason," if the anticompetitive effects of this policy
outweighed its legitimate business justifications.++3> This examination as to reasonableness
may result in a determination that the transaction or practice is reasonable under the particular
circumstances, that it is unreasonable, or even that such practices shall hereafter be held to be
per se illegal.
Within the scope of antitrust laws violations are horizontal restraints of trade, vertical
restraints of trade, monopolization, mergers and price discriminations. Horizontal restraints are
restraints occurring at a single level of production or distribution and are entered into between
competitors. Because of the serious impact on competition of horizontal restraints, such restraints
are the restraints most likely to be adjudged per se antitrust law violations. Vertical restraints
of trade, or those between businesses at different levels of the distribution chain, may also be
adjudged per se illegal, especially if they involve price.
The offenses of monopolization and attempts to monopolize involve examinations of
relevant market, as do examinations of the legality of mergers. The elements involved in
illegal monopolization and anticompetitive mergers, and both the Department of Justice and the
Federal Trade Commission pass upon the anti-competitiveness of proposed mergers. Then
too, there is the Robinson-Patman Act which prohibits price discrimination in the sale of
commodities.
Violation of the federal antitrust laws is a felony and carries with it stiff criminal and civil
penalties, including imprisonment and large monetary fines.++4> Conversely, if you have been
injured, as defined under these laws,++5> you would be entitled to treble damages, plus costs
and attorney's fees.
--Footnotes-**1<Lipson, Antitrust Problems in Foreign Commerce, the Practical Lawyer's Manual on Trade
Regulation 55 (American Law Institute, 1985).
**2<See El Cajon Cinemas v. American Multi-Cinema, 832 F Supp 1395 (SD Cal 1993).
**3<See Sullivan v. National Football League, 34 F3d 1091 (CA1 1994).
**4<For a discussion of criminal and civil penalties under the antitrust laws, see Chapter 28. See
also, 385 Trade Reg. Reports1 (September 13, 1995).
**5<For discussion of who is an "injured party" under the antitrust laws, see Peck v. General
5
Motors Corp., 894 F2d 844 (CA6 1990); National Ass'n of Pharmaceutical Manufacturers, Inc. v.
Ayerst Laboratories Division of/and American Home Products Corp., 850 F2d 904 (CA2 1988).
II.
BACKGROUND AND PURPOSES

A. 27:02 Background
The first federal antitrust law, enacted by Congress in 1890, was the Sherman Antitrust
Act.++1>
The Sherman Act was passed in response to the development of "trusts," or
combinations that controlled a number of firms in a single industry. The Act prohibits both
"contracts in restraint of trade" and "monopolization." Congress, however, chose not to define
these terms, instead leaving it to the courts to define them by judicial decision.
The United States Supreme Court soon recognized that the restriction on contracts in
restraint of trade could not be read literally, as every business contract restrains the conduct of the
contracting parties, at least to some extent. To circumvent this catch 22, the Supreme Court
developed the "rule of reason," which, in effect, reformulates 1 of the Sherman Act to prohibit
every contract which unreasonably restrains trade.++2> However, as examining each and
every business transaction for reasonableness, especially those transactions that experience has
shown to be inherently unreasonable, appeared to the Courts to be too burdensome, the Courts
prejudged such transactions to be per se unreasonable.
In 1914, to further protect the public against unreasonable restraints of trade, Congress
enacted the Clayton Act++3> and the Federal Trade Commission Act (FTC Act).++4> The
Clayton Act was designed to prohibit certain specific anticompetitive trade practices, and thus,
arrest the creation of trusts before their consummation.++5> To this end, the Clayton Act
prohibited specified restraints of trade that were thought to be particularly objectionable,
including price discrimination, exclusive-dealing arrangements, and mergers, provided that it
could be shown that their effect might be to substantially lessen competition.
The FTC Act created the Federal Trade Commission to take action against "unfair
methods of competition" and "unfair or deceptive acts or practices in or affecting
commerce."++6> The FTC was designed to be an agency that would acquire economic expertise
that both the Congress and the federal judiciary lacked.

In 1936, Congress enacted the Robinson-Patman Price Discrimination Act, which
amended 2 of the Clayton Act,++7> in response to concerns over growing dominance by chain
grocery stores. This Act expanded restrictions on price discrimination between purchasers of
products, so as to prevent discriminatory pricing that injured competition between such
purchasers.
The Sherman Act and the Clayton Act, as amended by the Robinson-Patman Act,
continue to form the basic federal antitrust laws. Congress has made minor modifications to these
statutes from time to time, but the essential framework has remained unchanged since 1936.
--Footnotes-**1><an>15 USC 12.
**2>See, e.g., Standard Oil Co. v. United States, 221 US 1, 55 L Ed 619, 31 S Ct 502 (1911).
**3><an>15 USC 1218.
**4><an>15 USC 45.
**5>Callmann Unfair Comp, Trademarks & Monopolies 4.01 (4th Ed).
**6><an>15 USC 45.
**7><an>15 USC 13.
B. 27:03 Purposes and Objectives
How can society preserve, protect, and facilitate the operation of our free enterprise
system; provide the "rules of the game" and necessary checks and balances for the business
community; and protect and benefit the consumer?++1> By enacting and enforcing laws that
promote competition and protect society from anticompetitive conduct, by inhibiting the
economically powerful from taking undue advantage of the economically less powerful, and by
clearly spelling out what types of conduct are unacceptable.
Providing the means of
accomplishing these purposes are the objectives behind the antitrust laws.
While academic debate continues, the United States Supreme Court has recently
reconfirmed that the purpose of the federal antitrust law as embodied in the Sherman Act is not
to protect businesses from the workings of the market, but is to protect the public from the failure
of the market.++2> Accordingly, the chief federal antitrust enforcer subsequently announced
7
that the "mission of the Antitrust Division is to protect competition and consumers in increasing
international and technology-driven markets through sound and reasoned enforcement of the
antitrust laws."++3>
Thus, the objectives that have been attributed to the antitrust laws include the
preservations of competition; the protection of consumers; the providing, through the per se
classifications, of guidelines as to what is permissible and what is impermissible; the promoting
of efficiency and/or consumer welfare;++4> and/or the encouraging of the decentralization of
economic power and/or the small rather than the large.++5> Then too, while the main objective
of the Sherman Act is to promote free and unrestrained competition, the main objective of the
Robinson-Patman Act is to protect the smaller business against the free and unrestrained
competition of the larger business.
Therefore, whichever of these or other views may hold sway at any given point in time, it
is clear that the purposes and objectives of the antitrust laws are both economic and social.
--Footnotes-**1>Lipson, Antitrust: Economic Theory, Traditional Wisdom and Restraints on Trade, 131
Pittsburgh Legal Journal 3 (March, 1983); 83-8 The Los Angeles Daily Journal Report 8 (April
22, 1983).
**2>Spectrum Sports, Inc. v. McQuillan, ____ US ____, 122 L Ed 2d 247, 113 S Ct 884 (1993).
**3>Anne K. Bingaman, Assistant Attorney General in charge of the Antitrust Division of the
United States Department of Justice, Trade Reg Rep 50,135 (April 8, 1994) (emphasis added).
On August 10, 1993, shortly after assuming office, Ms. Bingaman placed the antitrust bar on
notice that "I am an unabashed and enthusiastic supporter of vigorous antitrust enforcement," 279
Trade Reg Reports (CCH) 1-2 (August 17, 1993).
**4>See, e.g., Bork, The Antitrust Paradox (1978).
**5>Sullivan, Handbook of the Antitrust Law 11 (1977).
C. 27:04 State Laws
All of the States of the United States have also enacted their own antitrust legislation,
except for the Commonwealth of Pennsylvania, and the Supreme Court of Pennsylvania has
advised that the federal antitrust law is the common law of the Commonwealth.++1> The
primary purposes of these state statutes are to reach intrastate conduct that might be outside the
jurisdiction of the federal antitrust laws as it has no effect on interstate commerce, and to reach
anticompetitive conduct that has an effect on the State that the federal enforcers fail or choose
not to pursue. Various State Attorneys General are very active in their antitrust enforcement and
they do cooperate and coordinate with each other.
--Footnotes-**1>See Beck v. Athens Building Loan & Savings Assn., 65 F.R.D. 691, 695 (M.D. Pa. 1974);
Collins v. Main Line board of Realtors, 452 Pa. 342, 304 A.2d 493 (PA. 1973), cert. denied 414
U.S. 979; and Schwartz v. Laundry and Linen Supply Drivers' U., Etc., 339 Pa. 353, 14 A.2d
438, 441 (Pa. 1940).
* * *
C.
Proving Contract, Combination, or Conspiracy

1. 27:16 Direct and Circumstantial Evidence
An illegal contract, combination, or conspiracy under the Sherman Act can be established
by either direct or circumstantial evidence.++1> It can be established by showing in a civil case

that there was a 51 percent probability that an illegal agreement was entered into, and in a
criminal case that there was a 90 percent probability of such an agreement. Thus, a discussion or
communication in person, by telephone or by written or electronic means, followed by similar
actions, may be sufficient to establish an illegal agreement, as a tacit agreement is enough, an
express agreement is not required.++2>
This has been called the Wink of the Eye
doctrine.++3>
<p>The essence of any Sherman Antitrust Act violation is the illegal agreement itself and
not the overt acts performed in furtherance of the illegal agreement.++4>
The focus for
jurisdictional purposes is, therefore, the potential harm that would ensue if successful and not
what actually happened. The act of entering into such an agreement is, itself, the illegal act.++5>
--Footnotes-**1>See American Tobacco Co. v. United States, 328 US 781, 90 L Ed 1575, 66 S Ct 1125
(1946).
**2>See United States v. Champion International Corp, 557 F2d 1270 (CA9, 1977), cert den
434 US 938 (1977).
**3>See Lipson, Antitrust and the General Practitioner, The Practical Lawyer's Manual on Trade
Regulation 3, 5 (American Law Institute, 1985). See also, Esco Corp. v. United States, 340 F.2d
1000, 1007 (CA9, 1965); Flintkote Co. v. Lysfjord, 246 F.2d 368, 376 (CA9, 1957).
9
**4>Summit Health Ltd. v. Pinhas, 500 US 322, 114 L Ed 2d 366, 111 S Ct 1842 (1991).
**5>United States v. All Star Industries, 962 F2d 465 (CA5 1992).
2. 27:17 Conscious Parallelism
Mere similarity in prices, without more, does not provide a basis for inferring a contract,
combination, or conspiracy in restraint of trade.++1> On the other hand, similarity in prices plus
meetings or exchanges of pricing information may be sufficient to establish a conspiracy.++2>
--Footnotes-**1>See Reserve Supply Corp. v.Owens-Corning Fiberglass Corp., 971 F2d 37 (CA7 1992)
(advance announcement plus parallel pricing not enough); Cayman Exploration Corp. v. United
Gas Pipe Line Co., 873 F2d 1357 (CA10 1989); Krehl v. Baskin-Robbins Ice Cream Co., 664
F2d 1348 (CA9, 1982).
**2>United States v. Container Corp. of America, 393 US 333, 21 L Ed 2d 526, 89 S Ct 510
(1969).
3. 27:18 Intraenterprise Conspiracy - Single Trader Doctrine
In order to have a contract, combination, or conspiracy under
1 of the Sherman
Act++1> there must be two or more actors, though one of them may be acting
involuntarily.++2>. Thus, normally, unilateral conduct, no matter how much it restrains trade,
does not violate 1 of the Sherman Act,++3> though other provisions may be violated.
Because 1 of the Sherman Act requires separate entities, the Supreme Court has held
that a parent corporation is incapable of conspiring with a wholly owned subsidiary.++4> This
exclusion of intraenterprise conspiracies from the ambit of 1 of the Sherman Act is commonly
referred to as the "Single Trader Doctrine."
The Supreme Court in Copperweld Corp. v. Independence Tube Corp., reasoned that
Congress treated concerted behavior more strictly than unilateral behavior because the former
deprives the marketplace of the independent centers of decision making
that competition
assumes and demands. The Court confirmed that an agreement between a parent corporation and
its wholly owned subsidiary does not amount to a sudden joining of economic resources that had
previously served different interests, such as to normally require close scrutiny under 1 of the
Sherman Act.
10
Since Copperweld the courts have confirmed that an antitrust conspiracy does not exist
between a parent and a more than 50%, but less than wholly-owned, subsidiary, or between
jointly owned or more than 50% owned subsidiaries of the same parent.++5>
Thus, it was
recently held that a foreign manufacturer could not conspire under the antitrust laws with its
wholly-owned domestic subsidiary, nor could either of them conspire under the antitrust laws
with a domestic seller wholly owned by a subsidiary of a holding company where 80% of that
holding company was owned by the foreign manufacturer.++6> The results would be similar
under the Robinson-Patman Act.++7>
Likewise, under 1 of the Sherman Act corporations cannot normally conspire with their
own officers or agents, nor can the officers and agents conspire with each other in the context of
corporate decision making, for to conclude otherwise would be to subject corporations to liability
simply for competing.++8> However, under certain circumstances, the single trader doctrine
may give way to the independent personal stake doctrine, and an illegal conspiracy may be
found.++9>
Practice Tip: Be careful! While normally a single enterprise cannot conspire with itself,
it can monopolize or attempt to monopolize in violation of Section 2 of the Sherman Act,
it can discriminate in prices to others in violation of the Robinson-Patman Act, and it can
violate Section 1 of the Sherman Act by forcing a customer or customers to unwillingly
conspire with it in a per se illegal vertical price fixing scheme.
--Footnotes-**1>15 USC 1.
**2>See Lipson, Reaching for Per Se, 1X-3 Pennsylvania Law Journal-Report 3, 9-11 (January
20, 1986); Lipson, The Threshold of Per Se Antitrust Categorization, 96-5 The Los Angeles
Daily Journal Report 3, 7-8 (March 7, 1996). See also United States v. Parke, Davis & Co., 362
U.S. 29, 44 (1960), where the supplier induces its wholesalers to refrain from selling to noncomplying retailers.
**3>See Monsanto Co. v. Spray-Rite Service Corp., 465 US 752, 79 L Ed 2d 775, 104 S Ct
1464 (1984); United States v. Colgate & Co., 250 US 300, 63 L Ed 992, 39 S Ct 465 (1919).
**4>Copperweld Corp. v. Independence Tube Corp., 467 US 752, 81 L Ed 2d 628, 104 S Ct
2731 (1984).
**5>See Advanced Health-Care Services, Inc. v. Radford Community Hospital, 910 F2d 139
(CA4 1990) (two subsidiaries wholly owned by same parent corporation); Leaco Enterprises, Inc.
v. General Elec. Co., 737 F Supp 605 (D Or 1990) (91.9% ownership of subsidiary). Indeed, one
court has even gone so far as finding that a franchisor and franchisee comprised a "common
enterprise" and so could not conspire, but it would be most unwise to rely on such a case,
11
especially in light of the current renewed concerns regarding the potential anticompetitive effect
of vertical intrabrand restraints (See 27:07).
**6>Bell Atl. Business Sys. Services v. Hitachi Data Sys. Corp., 849 F Supp 702 (ND Cal 1994).
**7>Caribe BMW v. Bayerische Motoren Werke Aktiengesellschaft, 19 F3d 745 (CA1 1994).
**8>See Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F2d 71 (CA9,
1969), cert den 396 US 1062 (1970); Chapman v. Rudd Paint & Varnish Co., 409 F2d 635
(CA9, 1969).
**9>See Freeman v. Medevac Midamerica of Kansas, Inc., 719 F
Supp 1014 (D Kan 1989) (independent personal stake doctrine).
*From 1996 Draft of Chapter 27 by Barry J. Lipson
<><><><><><><><><><><>
<><><><><><><><><><><>
PUBLIC & PRIVATE ENFORCEMENT OF THE ANTITRUST LAWS

I.
SCOPE OF ENFORCEMENT
'28:01.
In General.
While the antitrust laws are the "rules of the game" for the conduct of business in our free
enterprise society, every game of such magnitude needs one or more umpires. However, as
television instant replay has taught us, no umpire or group of umpires can watch every part of the
playing field at every moment. Moreover, if every player was to play by his or her own rules, no
umpire or group of umpires could regulate play or enforce the official rules, and chaos would
result. Therefore, as with the Internal Revenue Code and the criminal codes, enforcement
strategies are developed to encourage compliance.
12
This chapter examine the enforcement strategies of the antitrust laws, their
implementation, the necessity of preventative antitrust counseling, and the advisability of
adopting and adhering to effective antitrust compliance programs. Congress, in its wisdom, has
developed a multi-level enforcement mechanism. On the federal governmental level, authority
for enforcement is shared by the United States Department of Justice and the Federal Trade
Commission. These agencies work together to some extent but also have independent roles. The
scope and nature of the shared jurisdiction of these agencies is briefly described in this chapter
FNT 1. See ''28:02 - 28:06.END,
''28:07 - 28:16.END
as is the independent role of the Department of Justice
and the FTC.
FNT 3. See ''28:17 - 28:28.END FNT
is the current level of enforcement activity of these agencies.
FNT 2. See
Also considered in this chapter
FNT 4. See 28:29 - 28:32.END FNT
In addition to federal antitrust laws, there are state laws. The enforcement of state
antitrust laws, which is generally the responsibility of the Attorneys General of the various states,
is also briefly considered in this chapter, with particular emphasis on the manner in which state
enforcement differs from federal enforcement.
FNT 5. See '28:33.END FNT
Finally, the antitrust laws are enforced on the private level by de facto "private attorneys
general" through civil treble damage law suits, civil treble damage class actions, and proceedings
for injunctive relief. These enforcement mechanisms are also considered in this chapter.
FNT 6.
See ''28:34 -28:39.END FNT
Violation of the antitrust laws can have dire consequences for both the businesses
involved and their employees who participate in the violations. In reviewing this chapter, it is
important to always keep in mind that criminal violation of the federal antitrust laws is a felony,
punishable by up to $10,000,000 in fines for corporations, and $350,000 in fines plus up to three
years imprisonment for individuals, for each violation, and that through the mandatory
application of the Antitrust Sentencing Guidelines, jail time is a distinct probability. Moreover,
the fines may be increased to twice the gain derived from the crime by the defendant or twice the
loss suffered by the victims of the crime, if either of those amounts is greater than the statutory
maximum fines. Consequently, it is important for all businesses to implement effective antitrust
13
compliance programs. Such programs are briefly described in this chapter.
FNT 7. See ''28:40 -
28:41.END FNT
II. SHARED FEDERAL AUTHORITY AND COOPERATION

Generally.
'28:02.
The antitrust laws are enforced by both the Antitrust Division of the United States
Department of Justice and the Federal Trade Commission's Bureau of Competition.
The
authority of the two agencies overlaps to some extent, but the agencies compliment one another.
The Sherman Antitrust Act
FNT 1. 15 USC ''1 - 7.END FNT
is enforced exclusively by the
Department of Justice, and the FTC enforces the Federal Trade Commission Act.
''41 - 58.END FNT.
27.END FNT
The agencies share authority to enforce the Clayton Act.
FNT 2. 15 USC
FNT 3. 15 USC ''12 -
The Sherman Act, Federal Trade Commission Act, and Clayton Act are "interlaced"
to provide for a "cumulative remedy."
FNT 4. New Jersey Wood Finishing Co. v. Minnesota Min & Mfg Co.,
332 F2d 346, 352 (CA 3, 1964), affd, 381 US 311, 14 L Ed 2d 405, 85 S Ct 1473 (1965). END FNT
The Department of Justice and the FTC also share competition law enforcement
jurisdiction with a number of other federal agencies. For example, the Department of Justice
shares authority to examine competitive implications of bank mergers with the Federal Reserve
Board and the Office of Comptroller of the Currency.
'28:03.
Premerger Notification.
Merger enforcement under Sections 7 and 7A of the Clayton Act is shared by the
Department of Justice and the FTC, including receiving and reviewing premerger notifications
under the Hart Scott Rodino Premerger Notification Act (HSR Act). Although the FTC has the
primary role in interpreting the HSR Act, advance notice regarding certain acquisitions must be
given to both the FTC and the Department of Justice. The advance notice gives the government
time, prior to the consummation of the merger, to investigate the proposed transaction, and to
seek an injunction pursuant to '7 of the Clayton Act, or to negotiate a restructuring of the merger
transaction, if the government believes the transaction is likely to violate the antitrust laws. FNT 1.
14
See 15 USC '18a.

See also '27:31.END FNT
'28:04.
Liaison Agreement.
For matters of concurrent jurisdiction, such as enforcement of Section 7 of the Clayton

Act and other civil antitrust cases, the Department of Justice and FTC have a liaison agreement
that has been in effect since the Truman Administration.
The liaison agreement avoids
overlapping investigations through a procedure that assigns matters on the basis of interest and
expertise.
This liaison agreement resulted from a United States Supreme Court decision
holding that the FTC could condemn conduct that violates the Sherman Act under Section 5 of
the FTC Act and that the filing of an action by the Department of Justice did not preclude the
FTC from proceeding with existing administrative litigation regarding the same conduct.
FNT 1.
See FTC v. Cement Institute, 333 US 683, ___ L Ed ___, ___ S Ct ___ (1948).END FNT
'28:05.
Domestic Cooperation.
In recent years, the Department of Justice and the FTC have cooperated through the
development and issuance of joint antitrust enforcement policy guidelines. Such guidelines have
been issued in areas such as mergers, intellectual property, and health care.
In addition, both agencies have sought, in recent years, to coordinate enforcement with
the state attorneys general. For example, the Department of Justice recently joined with the
Arizona Attorney General in challenging the use of a Amost favored nation@ clause by the Delta
Dental Plan, the dominant dental plan in Arizona, as being in violation of Section 1 of the
Sherman Act as well as the Uniform Arizona Antitrust Act.
'28:06.
International Cooperation.
The Sherman Antitrust Act specifically reaches restraints of trade and monopolization,
attempts to monopolize, and combinations or conspiracies to monopolize in "trade or commerce
among the several States, or with foreign nations." Section 7 of the Clayton Act reaches
acquisitions of companies, and Section 5 of the Federal Trade Commission Act reaches unfair
15
methods of competition, in "trade or commerce among the several States and with foreign
nations."
FNT 1. See 15 USC ''12, 18, 44, and 45. See also Lipson, Antitrust Problems in Foreign Commerce, The
Practical Lawyer's Manual on Trade Regulation 55, 57 (American Law Institute, 1985).END FNT
In 1993, the
United States Supreme Court reconfirmed that "the Sherman Act applies to foreign conduct that
was meant to provide and did in fact produce some substantial effect in the United States.@ FNT 2.
Hartford Fire Insurance Co. v. California, ___ US ___, 125 L Ed 2d 612, 113 S Ct 2891, 2909 (1993).END FNT
To foster international antitrust enforcement cooperation and coordination, the

International Antitrust Enforcement Assistance Act of 1994 was enacted. FNT 3.
(1994).END FNT
Public Law 103-438
This Act authorizes the Department of Justice and FTC to conduct investigations
on behalf of foreign antitrust authorities, and provide evidence to them, as part of a mutual
antitrust enforcement assistance agreement. Such an agreement must be reciprocal, and it must
be agreed that sensitive business information be kept strictly confidential and be used for
specified law enforcement purposes only.
FNT 4. 338 Trade Reg Rep (Part 2) (CCH) 16 (October 18,
1994).END FNT
This new international cooperation has been exhibited in the Microsoft investigation,
where as a result of the close coordination between the United States and the European
Commission, a Consent Judgement was filed in the United States and an "undertaking,@
containing essentially the same terms was "initiated" in the European Economic Community, at
approximately the same time.
FNT 6. Department of Justice Press Release, July 16, 1994, "Microsoft Agrees to
End Unfair Monopolistic Practices."END FNT
So far the United States has entered into antitrust
cooperation agreements with Australia, Germany, Canada, and the European Community, and
discussions are under way to achieve similar arrangements with others.
In conjunction with the passage of the International Antitrust Enforcement Assistance Act
of 1994, the Department of Justice and FTC announced their "New Joint Justice/FTC Antitrust
Enforcement Guidelines for International Operations."
(October 18, 1994).END FNT
FNT 5. 338 Trade Reg Rep (Part 2) (CCH) 37
These Guidelines confirm the Department of Justice's 1992 policy
statement that the Antitrust Division will enforce the United States antitrust laws where there
16
appears to be unlawful anticompetitive foreign restraints on United States exports; abandon, in

light of the Supreme Court's Hartford decision, the narrower view the 1988 Guidelines took with
regard to antitrust jurisdiction over imports; and reveal government policies and practices with
regard to gathering antitrust evidence abroad.
III.
DEPARTMENT OF JUSTICE, ANTITRUST DIVISION
'28:07.
The Antitrust Division of the United States Department of Justice acts for the United
States government as the prosecutor in federal criminal antitrust prosecutions, and as in-house
counsel in governmental civil antitrust actions.
According to the Antitrust Division:
[The] goal of the antitrust laws is to protect economic freedom and opportunity by
promoting competition in the marketplace. Competition in a free market benefits
American consumers through lower prices, better quality and greater choice.
Competition provides businesses the opportunity to compete on price and quality,
in an open market and on a level playing field, unhampered by anticompetitive
restraints. Competition also tests and hardens American companies at home, to
better to succeed abroad.
FNT 1 United States Department of Justice, Antitrust Division, Home
Page, hhtp://www._____.gov.END FNT
17
The Department of Justice believes that criminal enforcement against the most serious
antitrust offenses is its core mission. However, where criminal prosecution is not appropriate,
the Department of Justice institutes civil actions seeking court orders forbidding future violations
of the law and requiring steps to remedy the anticompetitive effects of past violations.
'28:08.
Business Review Procedure.
Although the Department of Justice is not authorized to give advisory opinions to private
parties, under certain circumstances it will review proposed business conduct and state its
enforcement intentions. A request for a business review letter should be made in writing to the
Antitrust Division. To be of any real value, the requesting parties must make full disclosure of
all relevant facts, and the Antitrust Division may conduct independent investigations. If the
Antitrust Division responds with a letter, it ordinarily will state only its present intent regarding
enforcement. The Antitrust Division may subsequently decide to prosecute, but it is unlikely that
a criminal action will be filed if the requesting party made full disclosure. A letter has no
application to a party who does not join in the request. FNT 1.
28 CFR '50.6.END FNT
Practice Tip: Because the request will notify the Department of Justice of proposed
conduct, a business review letter should be sought only if the parties are prepared to
abandon the proposed transaction if the letter is not obtained or if a negative response is
received.
'28:09.
Informal Investigations.
Investigations into possible antitrust law violations by the Antitrust Division may be
initiated as a result of a complaint by a private party.
Such investigations may also be
commenced on the Antitrust Division's own initiative.

While there is no specific statutory grant of power to do so, the Antitrust Division may
request to see company records, files, or other materials in connection with such an investigation.
A business may legally refuse to comply with such a request, but this may invite a more formal
inquiry.
18
Practice Tip: Since the Antitrust Division may be, and probably is, seeking evidence of
criminal activity, an informal request to inspect company records or other materials
should be complied with only with the guidance of counsel familiar with criminal
antitrust law and procedure.
'28:10.
Civil Investigative Demand.
The Antitrust Division of the Department of Justice may issue a "civil investigative
demand" (CID) requiring production of documentary material, answers to written interrogatories,
or oral testimony that may be relevant to a civil investigation. FNT 1.
15 USC ''1311 - 1314.END FNT
The CID may be issued to any person who may be in possession, custody, or control of any
documentary material, or may have information, relevant to a civil antitrust investigation.
15 USC '1312(a).END FNT
FNT 2.
If oral testimony is required, counsel may be present, and the witness
may invoke any applicable legal rights, including the privilege against self-incrimination.
FNT 3.
15 USC '1312(I)(7).END FNT
The recipient of a CID need not be, but can be, a target of the investigation. The CID
should clearly identify the conduct under investigation, but courts have been reluctant to set aside
a demand on the ground that it is a fishing expedition.
FNT 4. See Petition of Gold Bond Stamp Co., 221 F
Supp 391 (D Minn, 1963); Hyster Co. v. United States, 338 F2d 183 (CA 9, 1964).END FNT
Moreover, the
material obtained may be used in subsequent civil or criminal enforcement proceedings.

'28:11.
Amnesty and Cooperation.
On August 10, 1993, the Department of Justice announced an expansion of its 1978
Corporate Amnesty Policy, which now makes the granting of amnesty possible even after an
investigation has commenced. FNT 1.
See 279 Trade Reg Reports (CCH) 1-2 (August 17, 1993).END FNT
The
Antitrust Division believes that the new policy has been a resounding success. Under the former
policy, only one corporation per year applied for leniency. Under the new policy, the Antitrust
Division has received applications for corporate leniency at a rate closer to one a month. The
result has been a leveraging of the Division's resources, enabling it to prosecute numerous cases
19
that might otherwise have escaped prosecution.
FNT 2. Goals and Achievements of the Antitrust Division
U.S. Department of Justice, Fiscal Year 1993 through March 1996, March 27, 1996, p.8.END FNT
The success of the expanded leniency program is illustrated by the Division's case against
Miles Inc., maker of SOS steel wool pads. Miles and its primary competitor, Dial, which makes
Brillo pads, discussed prices and discount levels at meetings and in telephone conversations.
Dial came forward with information about the discussions and obtained amnesty from the
Division. Miles, on the other hand, pled guilty to a felony for conspiring to fix prices and was
fined $4.5 million.
Even if a defendant in an antitrust criminal prosecution does not turn itself in early
enough to get amnesty, the defendant may still be able to enter into a plea agreement with the
Department of Justice. Under the typical plea agreement, the defendant pleads guilty and agrees
cooperate with the government, including having its employees provide complete regarding their
knowledge of antitrust violations undertaken by themselves or others. A plea agreement is
binding on the defendant but not on the court. Should the Department of Justice determine that
the defendant has provided Asubstantial assistance,@ it will move the court at sentencing for a
reduced sentence. The Department of Justice may also agree in the plea agreement not to bring
any other criminal charges under the federal antitrust laws or other laws against the defendant,
certain employees of the defendant, and certain companies related to the defendant for any
offense committed before the entry of the plea.
FNT 3. See, e.g., Plea Agreement, United States v. Elkem
Metals Company, Criminal No. 95CR154S (WDNY September 22, 1995).END FNT
Depending on a defendant's bargaining position and its attorney's negotiating skills, the
defendant could obtain immunity from further criminal antitrust prosecution even beyond what
the defendant pleaded guilty to. Court approval may not be necessary for this to be binding upon
the government, regardless of how the court reacted to the plea agreement's sentencing
recommendations, so long as the defendant complies with its cooperation obligations.
Practice Tip: The best defense is a good offense. Do not to place your reliance on
amnesty or cooperation. Instead, place your reliance on an effective antitrust compliance
20
program.
'28:12.
Grand Jury.
The Department of Justice may proceed against a corporation by information when the
preliminary findings justify a criminal proceeding.
F2d 1313 (CA 9, 1980), cert denied 450 US 965.END FNT
FNT 1. United States v. Armored Transport, Inc., 629
An individual charged with a criminal violation
must be indicted by a grand jury, unless waived.

A grand jury subpoena may require a witness to testify or produce documents. The grand
jury is a powerful investigative tool since witnesses may be questioned and documents may be
obtained with only government attorneys present in the grand jury room. The witness has no
right to be informed of the charges in question, or of the subject of the investigation.
Practice Tip: While counsel cannot be in the grand jury room with a witness, counsel
can and should be in the corridor outside. The witness has the right, at anytime during his
or her grand jury testimony, to ask to go outside to speak privately with his/her counsel.
A person receiving a grand jury subpoena can challenge the breadth of the subpoena,
since it must be reasonable in relation to the inquiry being conducted.
Co. v. Walling, 327 US 186, 209, 90 L Ed 614, 66 S Ct 494 (1946).END FNT
vacate or modify.
FNT 2. See Oklahoma Press Pub.
This is done by a motion to
If a witness voluntarily complies with an overly-broad subpoena, the
information obtained may be used in evidence, since defects in grand jury proceedings do not
necessarily violate the Fourth Amendment so that the exclusion rule is applied.
v. Wallace & Tiernan Co., 336 US 793, 93 L Ed 1043, 69 S Ct 824 (1949).END FNT
FNT 3. United States
The scope of the subpoena
and the time for response is often open to negotiation with Antitrust Division attorneys.
A witness can assert the privilege against self-incrimination in a grand jury proceeding,
but only in relation to himself or herself as an individual. A corporate officer cannot assert the
privilege to avoid producing corporate records incriminating to that officer as an individual, since
the corporate officer holds the records in only an official capacity.
US 694, 704, 88 L Ed 1542, 64 S Ct 1248 (1944).END FNT
21
FNT 4. United States v. White, 322
Practice Tip:
It is often advisable for a person called to testify before a grand jury to
take "take the Fifth,@ regardless whether they believe themselves to be guilty. Obviously,
the advice of experienced legal counsel should be sought and followed in this situation.
Grand jury materials cannot automatically be used in a later civil case. Attorneys in the
civil division of the Department of Justice who did not participate in the criminal proceeding are
not entitled to automatic access to the grand jury materials for use in preparing a civil case. FNT 5.
United States v. Sells Engineering, Inc., 463 US 418, 77 L Ed 2d 743, 103 S Ct 3133 (1983).END FNT
The
government must move for a court-ordered disclosure and must show that the need for the
materials outweighs the public interest in grand jury secrecy.
'28:13.
Criminal Prosecutions.
The Sherman Antitrust Act specifically provides for criminal felony prosecutions by the
Department of Justice of its criminal provisions. Under the Sherman Act, so-called "naked"
restraints, which are also known as "per se violations," are normally prosecuted criminally.
Sherman Act convictions carry with them penalties of up to $10,000,000 for corporations, and up
to $350,000 and three years imprisonment for individuals, per violation. FNT 1.
FNT
15 U.S.C. ''1, 2.END
Alternatively, as with other federal felonies, courts have the power of imposing fines equal
to twice the harm suffered by the crime's victims or twice the gain enjoyed by the perpetrators.
Violation of '3 of the Robinson-Patman Act is also subject to criminal penalties. This
section provides criminal penalties of up to $5,000, or imprisonment for one year, or both.
FNT 2.
15 USC '13a.
See also '27:30.END FNT
Criminal prosecutions of individuals as well as corporations are commenced when

deemed appropriate by the Department of Justice, which may decide to strengthen the
government=s criminal antitrust case through the addition of tax evasion, mail fraud, and wire
fraud allegations, especially as contacts relating to most antitrust conspiracies utilize the
telephone, the telefax, and the mails. A judgment in favor of the government is prima facie
22
evidence of a violation of the antitrust laws in a subsequent civil action, a consequence that can
be avoided by a plea of nolo contendere. A nolo contendere plea, which translated from the Latin
means "I will not contest it," is the same as a guilty plea for the purposes of the criminal case if it
is accepted by the court, but it may not to be used as an admission elsewhere.
Antitrust Sentencing Guidelines.
'28:14.
The sentencing of individuals convicted of, or pleading guilty or nolo contendere to,
antitrust violations is now governed by Part R (Antitrust Offenses) of the Federal Sentencing
Guidelines.
FNT 1. 18 USC Appendix, Federal Sentencing Guidelines '2R1.1.END FNT
Under the Sentencing
Guidelines, the Antitrust Offense Levels run from 10 to 18, level 18 being adjudged to have the
same criminal culpability as theft of over $1,500,000, or the burglarizing of a warehouse of that
amount. FNT 2.
18 USC Appendix, Federal Sentencing Guidelines '2B2.1(G), (O).END FNT
The United States Sentencing Commission was concerned that an inappropriately high
percentage of offenders guilty of certain economic crimes, such as antitrust offenses, were
sentenced to probation only. Consequently, the Commission has written guidelines that provide
at least a short period of imprisonment in many such cases.
FNT 4. 18 USC Appendix, Federal Sentencing
Guidelines '2R1.1.
See also United States v. Haversat, 22 F3d 790 (CA8 1994) (coercive economic influence or economic pressure
on defendant is not a factor warranting decrease in sentence); United States v. Hayter Oil Co., 51 F3d 1265 (CA6 1995)
(in determining the severity of sentencing for price fixing, all sales are included and not just sales made at the "target"
price).END FNT
'28:15.
Perjury and Obstruction of Justice.
Perjury or lying under oath (or affirmance), destruction of documents, bribing potential
witnesses, and other acts that are designed to hide the existence of antitrust violations and
obstruct their prosecution are themselves crimes. While in this age of disgruntled employees and
ex-employees, the computer, the copy machine, the fax machine, and sophisticated economic
analysis, it is naive to believe that the existence of such schemes can stay hidden indefinitely,
23
such actions are still used to thwart the efforts of the Department of Justice. To discourage
perjury and related acts, the Antitrust Division has announced that it will continue to vigorously
prosecute every obstruction of justice and perjury violation that appears in any of its grand jury or
other matters and to seek maximum penalties in such cases.
FNT 1. Anne K. Bingaman, Assistant
Attorney General in Charge of the Antitrust Division of the United States Department of Justice, Trade Reg Rep (CCH)
&50,135 (April 8, 1994).END FNT
'28:16.
Government Civil Case.
The Department of Justice may also prosecute antitrust violations civilly, whether or not
they could have been prosecuted criminally. In a criminal prosecution the government must
prove its case "beyond a reasonable doubt" (or a 90% probability of guilt), while in a civil case
the plaintiff need only prove its case by a "preponderance of the evidence" (a 51% probability).
So-called "naked" restraints or "per se" violations are normally prosecuted criminally.
Merger cases and "rule of reason" violations will usually be prosecuted civilly. Remedies sought
by the Antitrust Division in civil cases include injunctions restraining continued anitcompetitive
activity, divorcement, divestiture, dissolution, recession, or other equitable remedy aimed at
correcting an unlawful condition. A judgment in favor of the government is prima facie evidence
of violation against the defendant, and may be given collateral estoppel effect in subsequent
private suits against the defendant. FNT 1.
Most civil cases are terminated by consent decrees, which must be negotiated with the
Antitrust Division, with approval required at several levels. Publication of a proposed consent
judgment at least 60 days prior to the effective date of such judgment is mandatory. The United
States is required to prepare a competitive impact statement and to publish it simultaneously with
the proposed consent decree. The competitive impact statement explains the proposal and
describes and evaluates alternatives.
FNT 2. 15 U.S.C. '16(b).END FNT
In addition, the court is
required to make a determination that the entry of a consent decree is in the public interest. FNT 3.
15 U.S.C. '16(e).END FNT
24
IV.
FEDERAL TRADE COMMISSION
'28:17.
The Federal Trade Commission enforces a variety of federal antitrust and consumer
protection laws and seeks to ensure that the nation's markets function competitively, and are
vigorous, efficient, and free of undue restrictions. In general, the FTC's efforts are directed
toward stopping actions that threaten consumers' opportunities to exercise informed choice.
Finally, the FTC undertakes economic analysis to support its law enforcement efforts and to
contribute to the policy deliberations of the Congress, the Executive Branch, other independent
agencies, and state and local governments when requested.
FNT
1.
FTC
Home
Page,
http://www.____.gov.END FNT
The FTC's antitrust arm, the Bureau of Competition, seeks to prevent business practices
that restrain competition.
The Bureau's primary mission is to exercise its enforcement
responsibilities by investigating alleged law violations and, when appropriate, recommending

that the Commission take enforcement action. Bureau attorneys implement the Commission's
enforcement directives in federal court and before Administrative Law Judges.
FNT 2. FTC Home
Page, http://www.____.gov.END FNT
'28:18.
FTC Advisory Opinions.
The FTC issues and publishes advisory opinions in response to specific questions
25
regarding whether a proposed course of conduct would be unlawful under the laws subject to
FTC jurisdiction. An opinion will not be given if the course of action has already begun or is
under investigation. FNT 1.
16 CFR '1.1.END FNT
The opinion may be revoked or modified later, but
the FTC will not file a complaint against one who relied in good faith on the original opinion.
FNT 2. 16 CFR '1.3.END FNT
As with the business review procedures of the Department of Justice, the disadvantage of
seeking clearance in an advisory opinion is that a negative response in the opinion is likely to be
followed by a complaint if the proposed action is taken. The FTC staff my also be asked their
opinion informally, on a hypothetical basis, especially in the premerger notification area, which
may be followed up by the inquirer with a "no response required" confirmatory letter to the FTC
staff member involved.
'28:19.
Special Reports and Questionnaires.
The FTC has broad authority to require corporations to file accurate reports regarding
information relevant to the FTC's authority.
FNT 1. 15 USC '46(b).END FNT
The scope of this power
is expansive, extending even to materials relevant to policy formulation. The power is backed by
penalties for failure to furnish required reports of up to $5,000 and/or three years in jail.
FNT 2. 15
USC '50. END FNT
Objections to a special report must first be taken up with the FTC.

Morton Salt Co., 338 US 632, 653, 94 L Ed 401, 70 S Ct 357 (1950).END FNT
also be tested by a declaratory judgment action.
FNT 3. United States v.
The validity of an order may
FNT 4. St. Regis Paper Co. v. United States, 368 US 208,
226-27, 7 L Ed 2d 240, 82 S Ct 289 (1961).END FNT
'28:20.
Access to Business Records.
The FTC is entitled to have access to the files of any person, partnership, or corporation,
for the purposes of inspecting and copying, at all reasonable times.
'2.11(a).END FNT
FNT 1. 15 USC '49; 16 CFR
However, the FTC=s exercise of this power is to be limited to documents
26
relevant to the FTC's inquiry.
FNT 2. FTC v. American Tobacco Co., 264 US 298, 306, 68 L ED 696, 44 S Ct 336
Refusal to permit access to records may subject the party to prosecution under 15
(1924).END FNT
USC '50. FNT 3.
16 CFR ' 2.13.END FNT
Subpoena of Witnesses and Documents.
'28:21.
The FTC has a right to subpoena witnesses and all documents relating to any matter under
investigation. Failure to respond truthfully can carry penalties of up to $5,000 and/or three years
in prison.
FNT 1. 15 USC '50.END FNT
Witnesses can be questioned under oath in an investigative
hearing. Subpoenas are enforceable by the FTC itself on application to a Federal District Court
in a contempt proceeding, and through criminal sanctions.
A motion to limit or quash an order for a deposition or an order requiring access to
documents or a subpoena to require testimony or production of documentary evidence must be
filed with the Secretary of the FTC within 20 days of service, or, if the return date is fewer than
20 days after service, the motion must be served prior to the return date.
2.11.END FNT
FNT 2. 16 CFR ''2.7(d),
In investigative, as opposed to adjudicative proceedings, FTC personnel often will
cooperate through informal stipulations limiting or reducing the scope of orders or subpoenas or
providing extensions of time for compliance.
Unfair and Deceptive Practices Trade Regulation Rules.
'28:22.
The FTC works to enhance the smooth operation of the marketplace by eliminating acts
or practices that are unfair or deceptive, and to this end undertakes economic analysis and holds
hearings to determine if certain practices are unfair or deceptive.
The FTC is expressly
authorized to promulgate rules respecting unfair or deceptive acts or practices.

'57a.END FNT
FNT 1. 15 USC
These rules, when issued pursuant to statutory procedure, have the effect of law,
FNT 2. 16 CFR '1.14,END FNT
and may apply to all industries on a nationwide basis, to particular
industries, or even to particular products or geographic areas. FNT 3.
16 CFR '1.22(b).END FNT
The violation of a rule constitutes an unfair or deceptive trade practice.

'1.8(a).END FNT
FNT 4. 16 CFR
The FTC may commence a civil action for violation of a rule, and when the
27
violation is intentional, a civil penalty of up to $10,000 for each violation may be imposed.
FNT 5.
15 USC ''45(m), 57b.END FNT
Rule making may be initiated by the FTC or on petition of an interested party. Following
publication of a proposed rule in the Federal Register, public comment at a hearing or in writing
is solicited. After considering these comments, the FTC may adopt a final rule and publish it in
the Federal Register, together with a statement of the basis, purpose, and findings.
FNT 6. 15 USC
'57a.END FNT
'28:23.
Industry Trade Practice Rules and Guides.
Industry Trade Practice Rules and Guides are administrative interpretations of the laws
subject to FTC jurisdiction, for the guidance of the public. They may be promulgated on the
FTC's own initiative or pursuant to petition of any interested party, but do not have the force of
law. They are designed to inform those in business of the factors that guide FTC decisions. In
recent years, the FTC and Department of Justice have cooperated in the development and
issuance of joint antitrust enforcement policy guidelines in areas such as mergers, intellectual
property, international operations, and health care.
'28:24.
Prehearing Cease and Desist Procedures.
The FTC acts by a majority vote of its five commissioners. The commissioners decide
both if a complaint in a cease and desist case should be issued in the first place, and then, later, if
the decision of the Administrative Law Judge who hears the case should be approved or rejected.
The FTC initiates prosecution by issuing a complaint.
FNT 1. 16 CFR '3.11(a).END FNT
person or entity against whom the complaint is issued is known as the respondent.
complaint must be answered within 30 days, unless an extension is granted.
The
The
The FTC
Administrative Law Judge, formerly known as the hearing examiner, generally has the power to
grant a motion to dismiss.
Discovery in a cease and desist complaint hearing is similar to that allowed by the Federal
Rules of Civil Procedure.
28
The Administrative Law Judge must be
asked to issue an order to take depositions.
However, the grounds
for granting the order are liberal. The respondent may in turn file a motion for production of
confidential records from FTC files. FNT 4.
It is possible to enter into a voluntary settlement prior to the hearing. Also, prior to the
filing a formal complaint, the FTC staff may provide the prospective respondent with the
opportunity to submit a proposal for the disposition of the matter in the form of a consent
agreement, which is then subject to acceptance by the FTC Commissioners.
2.34.END FNT
FNT 5. 16 CFR ''2.31 -
After a formal complaint has been filed, a proposal to settle by consent agreement
may be submitted to the Administrative Law Judge by way of a motion to withdraw the matter
from adjudication. An order withdrawing the matter from adjudication stays the proceeding
pending a determination by the Commission regarding the consent agreement. The FTC reserves
the right to return the matter to adjudication. FNT 6.
'28:25.
Cease and Desist Complaint Hearing.
The cease and desist complaint hearing is conducted by an FTC Administrative Law
Judge.
At the hearing the respondent has the right to counsel, and
the rights of due notice, cross-examination, presentation of evidence, objection, motion,

argument, "and all other rights essential to a fair hearing."
FNT 2. 16 CFR '3.41(c).END FNT
The
rules of evidence are more liberal than they would be in court, the test being whether the
evidence is "relevant, material, and reliable." FNT 3.
'28:26.
Cease and Desist Judgment and Review.
An initial decision, supported by specific findings of fact and conclusions of law, must be
filed by the Administrative Law Judge within 90 days of completion of the hearing. If the
decision is against the respondent, the decision will also include an appropriate cease and desist
order. FNT 1.
Within 10 days after service of the initial decision, any party may file notice of intent to
appeal to the FTC Commissioners.
29
The FTC Commissioners may
also review the decision on their own initiative.
Upon appeal from or
review of an initial decision, the FTC Commissioners may exercise all powers given to the
Administrative Law Judge and may make their own findings of fact and conclusions of law.
FNT
4. 16 CFR '3.54.END FNT
The respondent also has a right to judicial review of the FTC's final decision. This is
available in any United States Court of Appeals for the circuit where the respondent resides or
carries on business or where the challenged practice occurred. On appeal, the FTC's findings of
fact, if supported by the evidence, shall be conclusive.
Although conclusions of law are
reviewable, the FTC has authority to decide what constitutes an "unfair method of competition."
FNT 5. See FTC v. Brown Shoe Co., 384 US 316, 320-21, 16 L Ed 2d 587, 86 S Ct 1501 (1966).END FNT
There are cases interpreting '5(a) of the Clayton Act
FNT 6. 15 USC '16(a).END FNT
as
allowing an FTC decision and order to be used as prima facie evidence in subsequent private
suits. However, FTC findings may not be given collateral estoppel effect in subsequent private
suits. FNT 7.
'28:27.
Cease and Desist Compliance Procedures.
A compliance report must be submitted to the appropriate FTC compliance division

within 60 days after a cease and desist order is served upon respondent.
FNT
FNT 1. 16 CFR '2.41(a).END
Thereafter, further reports may be required at the discretion of the FTC. Either the FTC or
the respondent may later move for modification of an order based upon changes in conditions or
laws. FNT 2.
Moreover, the FTC has adopted a "sunset" rule whereby all
orders terminate after 20 years if there has been no intervening violation of the order.
FNT 3.
Robert Pitofsky, Remarks, Business Development Associates Inc., Washington, D.C., March 4, 1996.END FNT
As an alternative to proceeding with a formal complaint, the FTC may obtain written
assurance of voluntary compliance from the potential respondent, pursuant to an agreement
regarding the activity in question.
FNT 4. 16 CFR ''2.31 - 2.34.END FNT
the violation is not considered a substantial one.
30
This is generally done when
FTC Civil Enforcement Actions.
'28:28.
The FTC may bring a civil action for violation of its rules relating to unfair or deceptive
acts or practices or for violation of any cease and desist order that has become final.
'57b.END FNT
FNT 1. 15 USC
With respect to the violation of a final cease and desist order, the findings of the
FTC in the proceeding that resulted in the cease and desist order are conclusive.
FNT 2. 15 USC
'57b(c).END FNT
Remedies that may be granted include rescission or reformation of a contract, the refund
of money or the return of property, the payment of damages, and public notification respecting
the violations. Award of exemplary or punitive damages, however, is expressly prohibited.
FNT 3.
15 USC '57b(b).END FNT
With respect to the violation of an FTC trade regulation rule relating to unfair or
deceptive acts or practices, the FTC is also authorized to bring a civil action for violation of the
rule. When the violation is intentional, a civil penalty of up to $10,000 for each violation may be
imposed. FNT 4.
15 USC ''45(m), 57b.END FNT
V. FEDERAL ENFORCEMENT ACTIVITY

'28:29.
Department of Justice, Antitrust Division.
The potential seriousness of criminal antitrust prosecutions is illustrated by the October

15, 1996, announcement of the Department of Justice that Archer Daniels Midland Co. agreed to
plead guilty and pay a $100 million criminal fine for its role in two international conspiracies to
fix prices to eliminate competition and allocate sales in the lysine and citric acid markets. This
$100 million was the largest fine imposed in a criminal antitrust case and, and, according to the
Department of Justice, Ashould send a message to the entire world [that] if you engage in
collusive behavior that robs U.S. consumers, there will be vigorous investigation and tough,
tough penalties.@
FNT 1. Department of Justice Press Release, October 15, 1996. END FNT
During Fiscal Year 1995 the Antitrust Division had also achieved several records
including obtaining a total of $40.4 million in criminal antitrust fines against corporations, then
31
the highest amount ever, and the filing of 15 consents to stop anticompetitive practices through
civil remedies, which was the highest number in 15 years.
March 28, 1996. END FNT
FNT 2. Department of Justice Press Release,
Other recent achievements in antitrust enforcement by the Antitrust
Division include having disciplined three trade organizations engaged in activities that raised the
prices of goods and services their members sold to the public (the American Bar Association,
National Automobile Dealers Association, and the Association of Retail Travel Agents); having
broken up an international price fixing cartel in thermal fax paper, resulting in the first criminal
antitrust prosecution of a major Japanese corporation (Mitsubishi Corp.); having obtained a $15
million criminal antitrust fine from a manufacturer of commercial explosives for conspiring to
fix prices (Dyno Nobel); having removed anticompetitive restraints imposed on American
exports that would have added up to $1 billion to U.S. export revenues over the next six years
(Pilkington PLC);
having settled a case against seven major airlines that could have cost
consumers well over $1 billion in higher ticket prices (Airline Tariff Publishing Co.); and having
saved millions of dollars on weapons procurement for the Department of Defense by challenging
an anticompetitive Ateaming arrangement@ between suppliers of cluster bombs. FNT 3. Department of
Justice, Press Release, March 28, 1996 END FNT
One of the Antitrust Division's priorities is to bring civil nonmerger enforcement actions
in order to combat anticompetitive conduct that does not rise to the level of a criminal violation,
but that unreasonably raises prices for consumers or otherwise harms the competitive process. In
1993, the Division created a Civil Task Force dedicated to cases of national and international
importance in order to enhance its civil enforcement effectiveness. The Division also established
a New Cases Unit with the responsibility of reviewing and assessing potential cases. As a result,
the Division filed 10 such cases in fiscal year 1994 and 15 cases in fiscal year 1995, involving a
wide range of industries.
FNT 4. Goals and Achievements of the Antitrust Division U.S. Department of Justice,
Fiscal Year 1993 through March 1996, March 27, 1996, p.26.END FNT
'28:30.
Federal Trade Commission.
32
According to Robert Pitofsky, FTC Chairman, the FTC is presently trying "to strike a
middle ground between what many people believe was an excessively active enforcement in the
1960's and the minimalist enforcement of the 1980's.@ For example, the FTC investigates and is
prepared to enforce the law against resale price maintenance agreements, some carefully selected
nonprice vertical restrictions, attempts to monopolize, boycotts and vertical and conglomerate
mergers.
FNT 1. Robert Pitofsky, Remarks, Business Development Associates Inc., Washington, D.C., March 4,
1996.END FNT
The Federal Trade Commission has announced that during fiscal year 1994 their antitrust
enforcement arm, the Bureau of Competition, had brought more cases than in any one year since
1980.
FNT 2. 349 Trade Reg Rep (CCH) 7 (January 4, 1995).END FNT
Subsequently, the Federal Trade
Commission handed down a decision against the California Dental Association striking down
restraints on truthful price advertising as per se unlawful; entered into a consent order with Dell
Computers, whereby Dell agreed to drop patent claims affecting the many personal computers;
and entered into a consent order with RxCare of Tennessee, Inc., in which the leading provider of
pharmacy network services in Tennessee agreed to stop requiring so-called Amost favored nation@
clauses in its contracts with pharmacies under which pharmacies that agreed to accept a lower
reimbursement rate for providing prescription drugs to any other plans= subscribers must afford
RxCare the lower rate as well. During this same period, FTC consent orders included four
charging price fixing against Reebok International, Korean Video Stores, Physicians Group, Inc.,
and Council of Fashion Designers of America; two charging concerted boycotts against Puerto
Rican Psychiatrists and Santa Clara Motor Car Dealers; two charging market allocation against
Time Warner/Summit and Federal News Service Group/Reuters America, Inc.; and one charging
concerted restrictions on advertising against the Port Washington Real Estate Board.
FNT 3.
William J. Baer, Director, FTC Bureau of Competition, Report from the Bureau of Competition: Looking Back and Going
Forward, ABA Federal Trade Commission Committee Meeting, Washington, D.C., March 28, 1996.END FNT
'28:31.
Federal Merger Activity.
33
In 1995, merger activity was unprecedented, both in terms of volume and value. By one
count, 8,956 mergers were announced, worth a total of $457.88 billion, or well over $1 billion a
day. Merger activity cut across a variety of sectors, from banking to electric power, information
technology, computer software, media, health care and others.
FNT 1. Lawrence R. Fullerton, Deputy
Assistant Attorney General, Antitrust Division, Recent Developments in Merger Enforcement, The Conference Board,
Tucson, Arizona, Delivered February 9, 1996, Text Released March 13, 1996.END FNT
The number of merger
investigations opened by the Department of Justice increased from 105 in fiscal year 1994 to 133
in 1995, the highest number of merger investigations in a decade. Second requests increased
from 30 to 37, the highest since 1987. Between January 1993 and March 1986, 60 mergers were
challenged by the Antitrust Division of the Department of Justice. Of these, 27 were challenged
in court, 20 were restructured to alleviate the threat of competition, and an additional 33 merger
were abandoned or restructured by the parties as a result of the Department of Justice=s
investigation. FNT 2.
Department of Justice Press Release, March 28, 1996.END FNT
The FTC=s Bureau of Competition has also dealt with record levels of mergers and
acquisition activity, primarily through its review of Hart-Scott-Rodino Act (HSR Act) premerger
notifications. The FTC has recently grown increasingly concerned about HSR Act compliance in
the private sector. In a recent case, the FTC, obtained a record $3.1 million civil penalty to settle
charges that Sara Lee Corporation violated the HSR Act by failing to file notification in
connection with its acquisition of certain shoe polish brands. In addition, the FTC required
divestiture of the assets wrongly acquired by Sara Lee.
FNT 3. See United States v. Sara Lee Corporation,
No. 1:96 CV00196 (DDC, Feb. 9, 1996); Sara Lee Corporation, FTC Docket No. C-3523 (Consent Order, Aug. 24,
1995).END FNT
In another case, the FTC obtained a settlement of $2.97 million, or $10,000 per
day for each day of noncompliance with the HSR Act, in a case involving noncompliance with
Item 4(c)=s requirement to produce competitively sensitive studies and analyzes of the deal.
FNT 4.
See United States v. Automatic Data Processing, Inc., No. 1:96CV00606 (DDC filed March 27, 1996).END FNT
The states, with the assistance of the Antitrust Division, are also getting more active in
opposing mergers they believe to be anticompetitive.
34
For example, Florida joined with the
Department of Justice in attacking the proposed merger of two Florida hospitals.

Reg Rep (CCH) 3 (January 4, 1995).END FNT
FNT 5. 349 Trade
In addition, the Antitrust Division has undertaken a
number of joint investigations with State Attorneys General, resulting in significant divestitures
of bank branches and deposits. FNT 6.
'28:32.
Department of Justice Press Release, March 28, 1996.END FNT
Trade Associations.
Of particular interest to government and private antitrust enforcers are trade associations
and their members. Mere trade association membership may provide the element of combination
that converts lawful individual conduct into illegal conspiracies.
FNT 1. See Lipson, The Art of Forming
and Joining Trade Associations, 53 Small Business Legal Report 5; Lipson, Avoiding Antitrust Problems in Trade
Associations, The Practical Lawyer's Manual on Trade Regulation, 27 (American Law Institute, 1985).END FNT
Good
antitrust counseling in this area begins with the recognition that the anticompetitive motive is
always potentially lurking in the midst of any group of competitors; that the means to devise an
anticompetitive campaign are readily available to anyone with a little imagination; and that the
opportunity is all-too-readily provided by the trade association, and by the trade association
meeting in particular. As stated recently by a Department of Justice official, AIt is not an
exaggeration to say that a trade association meeting can be an incubator for antitrust violations.@
FNT 2. Anne K. Bingaman, Department of Justice Assistant Attorney General, Recent Enforcement Actions by The
Antitrust Division Against Trade Associations, DC Bar Trade Association and Antitrust Law Committee, Washington,
D.C., February 28, 1996.END FNT
The Antitrust Division reported that it has recently disciplined three trade organizations
engaged in activities that raised the prices of goods and services their members sold to the public.
FNT 3. Department of Justice Press Release, March 28, 1996. END FNT
One case involved the American Bar
Association=s law school accreditation program, which the Department of Justice charged was
controlled by law school faculty to force law schools to inflate faculty salaries and benefits. In
another case, the Department of Justice charged that officers and directors of the National
Automobile Dealers= Association engaged in a conspiracy to orchestrate group boycotts against
auto manufacturers and discount auto brokers who offered rebates directly to consumers rather
35
than giving the discounts to the dealers, and to stop them from offering so-called Afleet subsidy@
discounts to volume buyers. The third case involved the Association of Retail Travel Agents. In
that case, the Department of Justice charged the trade association with attempting to organize a
boycott of their members against airlines, hotels, and car rental companies who refused to adhere
to the association=s recommended minimum travel agent commission levels. The Antitrust
Division, in United States v. Scuba Retailers Association, Inc., has also attacked this
association=s coercing manufacturers and distributors of scuba equipment to stop selling directly
to consumers through the mail.
FNT 4. Anne K. Bingaman, Department of Justice Assistant Attorney General,
Recent Enforcement Actions by The Antitrust Division Against Trade Associations, DC Bar Trade Association and
Antitrust Law Committee, Washington, D.C., February 28, 1996.END FNT
Similarly, the Federal Trade Commission has recently handed down a decision against the
California Dental Association striking down restraints on truthful price advertising as per se
unlawful, and finding other restraints by this association unlawful under the antitrust laws on a
rule of reason analysis. The FTC has also entered consent decrees against a number of other trade
associations including orders based on charges of price fixing against the Council of Fashion
Designers of America; charges of concerted boycotts against Puerto Rican Psychiatrists and
Santa Clara Motor Car Dealers; and charges of concerted restrictions on advertising against the
Port Washington Real Estate Board.
FNT 5. William J. Baer, Director, FTC Bureau of Competition, Report
From The Bureau of Competition: Looking Back and Going Forward, ABA Federal Trade Commission Committee
Meeting, Washington, D.C., March 28, 1996.END FNT
VI.
STATE ATTORNEYS GENERAL
'28:33.
In General.
Each of the state attorneys general is authorized to bring an action for any violation of the
Sherman Act as parens patriae on behalf of individuals residing in the state. FNT 1.
15 USC '15c.
See Authority of state to sue as parens patriae to recover treble damages under '4 of Clayton Act (15 USCS
'15), 23 ALR Fed 878.END FNT
The amount of monetary relief awarded must exclude any amounts
36
already awarded for the same injury and any amount that is allocable to a business entity.
State attorneys general may also bring actions under the antitrust laws of their states. In
most instances, state antitrust laws are similar to the federal antitrust laws, but do not require
proving that interstate commerce was involved.
Since 1994, cooperation between the antitrust enforcement authorities of the various
states and with the federal government has accelerated. For example, all 50 states and the
District of Columbia jointly settled an alleged ladies' athletic shoes price-fixing case against Keds
Corporation for $7.2 million and Keds' agreement to refrain from resale price maintenance in the
future. Twenty states settled antitrust charges against domestic and foreign insurers for $36
million and agreements to restructure the industry trade association to be less dependent on the
large insurers, to be more available to wider industry utilization, and to be more responsive to
consumers. Ten states settled a price fixing class action against eight airlines for a $40 million
discount program to be made available to passengers allegedly injured by such anticompetitive
conduct.
FNT 2. 349 Trade Reg Rep (CCH) 5 (January 4, 1995).END FNT
Then too, 1994 marked the first
joint federal/state antitrust prosecution, involving an attack on the merger of two Florida
hospitals. FNT 3.
VII.
349 Trade Reg Rep (CCH) 3 (January 4, 1995).END FNT
PRIVATE CIVIL ANTITRUST ACTIONS
'28:34.
Treble Damage Actions.
Since the passage in 1914 of the Clayton Act, federal law has provided a statutory basis
for private treble damage antitrust actions. Section 4 of the Clayton Act
FNT
FNT 1. 15 USC '15.END
provides that any person whose business or property is injured "by reason of anything
forbidden in the antitrust laws my sue therefor" in federal district court, and shall recover treble
damages, and costs, including attorneys fees. In 1990, 15 USC '15a was amended, removing the
restriction on civil suits by the United States to recovery of actual damages, and mandating that
the United States, like private plaintiffs, "shall recovery threefold the damages."
The private treble damage action serves a dual purpose.
37
First, it is designed to
compensate private persons for cognizable damages resulting from antitrust law violations.
Second, it is an important means of combating unlawful practices, because the private civil
antitrust suits complement, strengthen, and expand the government's efforts in enforcing the
antitrust laws. FNT 2.
See Flintkote Co. v. Lysfjord, 246 F2d 368, 398 (CA 9, 1957), cert denied 355 US 835.
See also 16G von Kalinowski, Antitrust Laws and Trade Regulation 81.01(1).END FNT
In effect,
practitioners prosecuting private treble damage antitrust suits, and private antitrust injunctive
proceedings, act as "private attorneys general" complementing and supplementing the
enforcement efforts of the government.
'28:35.
Class Actions.
In appropriate cases, private antitrust suits may be brought as treble damage class actions,
lumping the claims of all potential plaintiffs similarly injured under the antitrust laws into one
suit. According to Rule 23(a) of the Federal Rules of Civil Procedure, to bring a private antitrust
action as a class action, the class must be so numerous that joinder of all members is
impracticable, there must be questions of law or fact common to the class, the claims of the
representative parties must be typical of the claims of the class, and the representative parties
must fairly and adequately protect the interests of the class. At least one of the additional criteria
of Rule 23(b) of the Federal Rules of Civil Procedure must also be met. The state Attorneys
General also use the class action as a vehicle to lump the antitrust claims of various state and
local governments together and obtain relief on behalf of all of them.
'28:36.
RICO Claims.
Racketeer Influenced and Corrupt Organization Act (RICO),
FNT 1. 18 USC '1962END FNT
claims are being used more and more in conjunction with antitrust claims in private antitrust
actions.
FNT. 2. See Bonilla v. Trebol Motors Corporation, 1993 WL 138297 (DPR March 30, 1993); Dongelewicz v.
First Eastern Bank, 3:CV-95-0457 (MD Pa, June 19, 1996).END FNT
RICO makes it unlawful for any person to use or invest income obtained from a pattern of
racketeering activity in an enterprise engaged in interstate commerce, to control any enterprise
38
engaged in interstate commerce through a pattern of racketeering, or to conduct the affairs of the
enterprise through a pattern of racketeering activity.
FNT 3. 18 U.S.C. '1962.END FNT
The law also
makes is unlawful for any person to conspire to do any of the foregoing. "Racketeering activity"
is defined to include any act which is indictable under any of the enumerated provisions of Title
18 of the United States Code. FNT 4. 18 U.S.C. '1961(l).END FNT
'28:37.
State Direct Purchaser Statutes.

Several states have so-called "indirect purchaser statutes."
These statutes allow
consumers to recover damages directly from manufacturers who fix prices to their distributors,
who then resell to such "indirect purchaser" consumers, or otherwise violate state antitrust laws.
FNT 1. See, e.g., Ala Code '6-5-60(a); Cal Bus & Prof Code '16750(a); Minn Stat '325D.57.END FNT
Federal law limits recovery to direct purchasers.

720, 52 L Ed 2d 707, 97 S Ct 2061 (1977).END FNT
FNT 2. See Illinois Brick Co. v. Illinois, 431 US
Consumers cannot, for example, recover for damages
suffered as a result of paying higher prices at the retail level due to price fixing by manufacturers
who only sell to wholesalers. This is the case even if the wholesaler passes on the cost to the
consumer. FNT 3.
Kansas v. Utilicorp United Inc., 494 US 1053, 108 L Ed 2d 759, 110 S Ct 1519 (1990).END FNT
Consumers may, however, have a claim against the price-fixing manufacturers under a
state indirect purchaser statute, which might be asserted in a class action or by a state attorney
general on behalf of consumers in the state.
Although federal and state law would be
inconsistent here, the United States Supreme Court has ruled that state indirect purchaser statute
are not preempted by federal law.
109 S Ct 1661 (1989).END FNT
FNT 4. See California v. ARC America Corp., 490 US 93, 104 L Ed 2d 86,
This is so even if such a state's laws provides that its antitrust laws are
to be construed based on the federal antitrust laws.
FNT 5. See State of Illinois ex rel Burris v. Panhandle
Eastern Pipe Line Co., 935 F2d 1469 (CA7 1991).END FNT
'28:38.
Private Injunctive Relief.
In addition to private treble damage actions, the Clayton Act authorizes private actions for
injunctive relief. Private injunction actions are provided for by Section 16 of the Clayton Act.
39
FNT 1. 15 USC '26.END FNT
Such actions may be used to prevent mergers or other transactions that
would have anticompetitive effects.

To enjoin a merger under Section 16, the plaintiff must prove that there is a likelihood of
an injury of the type that the antitrust laws were intended to prevent. The fact that the plaintiff, a
competitor of the merged companies, would lose profits due to increased competition is not the
prerequisite type of injury.
FNT 2. See Cargill, Inc. v. Monfort of Colorado, Inc., 479 US 104, 93 L Ed 2d 427,
107 S Ct 484 (1986).

See also Clayton Act -- Standing, 78 ALR Fed 159.END FNT
However, if the plaintiff can prove that
the merged companies will acquire monopoly power in the relevant market, this may be
sufficient to support injunctive relief.
FNT 3. See R.C. Bigelow, Inc. v. Unilever N.V., 867 F2d 102 (CA2
1989).END FNT
Prosecuting Private Actions.
'28:39.
A large number of private antitrust actions are filed each year, with any number of them
ultimately being successful. In addition to being brought independently, private antitrust suits
may ride on the coattails of governmental actions.
As has been mentioned previously, a
successful criminal antitrust prosecution is prima facie evidence of violation of the antitrust laws
against the defendant (although not if the defendant pleaded nolo contendere).
'28:13.END FNT
FNT 1.
See
Judgments in favor of the government in civil actions by the Department of
Justice may be given collateral estoppel effect in subsequent private suits against the defendant.
FNT 2. 15 U.S.C. '16(a).END FNT
There are also cases interpreting '5(a) of the Clayton Act as
allowing an FTC decision and order to be used as prima facie evidence in subsequent private
suits. FNT 3.
See 28:25.END FNT
Clear per se violations of the antitrust laws are relatively easy to try and prove, and are
usually comparatively easy to settle. Then too, the true extent of private antitrust settlements is
unknown as some are settled before a complaint is filed and many settlements are accompanied
by agreed to gag orders, making the terms and even the fact of settlement secret. Even in tough
40
times for antitrust litigation, settlements are much more common than normally believed.
However, private antitrust actions can be lengthy, cumbersome, and expensive.
Moreover, fully litigated civil antitrust cases are often followed by lengthy appeals after
judgment. Judicial hindsight is often freely exercised in these appeals, and because of the
longevity of antitrust suits, these actions are subject to shifting decisional trends.
VIII. ANTITRUST COMPLIANCE PROGRAMS
'28:40.
In General.
Because of the high risks involved for small, medium, and large businesses in violating
the antitrust laws and the general lack of familiarity with these laws, all businesses should
institute effective antitrust compliance programs.
FNT 1. See Lipson, How to Establish an Effective
Compliance Program (Federal Legal Publications, 1990); Lipson, How to Implement an Antitrust Compliance Program,
The Practical Lawyer's Manual on Trade Regulation, 33 (American Law Institute, 1985).END FNT
also need to be conducted.
Antitrust audits
FNT 2. Toll & Bauer, The Corporate Antitrust Audit -- Establishing a Document
Retention Program, The Practical Lawyer's Manual on Trade Regulation, 41 (American Law Institute, 1985).
For a sample antitrust compliance checklist, see Advising Small Businesses - Forms '27:03.END FNT
This is especially true for businesses that belong to one or more trade associations, as mere
membership may provide the element of combination that converts lawful individual conduct
into illegal conspiracies. FNT 3.
See '28:32.END FNT
The increasing amounts of criminal fines and civil awards and settlements, and
enforcement activity, makes such preventative antitrust counseling by attorneys experienced in
antitrust matters clearly cost effective and pro-survival. As has been mentioned, there recently
there was a $100 million fine for the price fixing of food and farm additives, and some of the
smaller fines and judgments may have serious adverse impact on the businesses involved.
FNT 4.
See ''28:29 - 28:30.END FNT
To avoid these dire consequences, an effective antitrust compliance program must be

adopted and implemented. As part of such a program, all personnel of a business must be
41
educated to avoid the obvious antitrust pitfalls. All personnel must also be instructed to consult
with antitrust counsel whenever they have doubts as to the applicability of the antitrust laws,
questions about the legality of certain conduct, concerns as to the legitimate business purpose of
a proposed transaction, or when they otherwise suspect that there may be an antitrust issue. FNT 5.
Lipson, Corplaw7 Commentaries, Antitrust in Action, Part 3 - Advice for Potential Defendants and Plaintiffs, Pittsburgh
Legal Journal, Vol.122, No. 97, p. 1 (May 21, 1996).END FNT
'28:41.
Greetings from the Federal Pen.
Indeed, it is apparent that at least one individual who has served hard time for price fixing
and bid rigging, wishes he had been educated about antitrust compliance. While in prison, the
individual wrote to the members of the trade association of which he had been executive director,
saying:
As you know, I am at Elgin Air Force Base Federal Prison Camp. . . . There are no bars or
fences but they take a head count about every four hours. Very few have ever
walked out of here. If they try and get caught, they are shipped to a maximum
security prison. And, they are caught. . . . I would recommend that each of you
study the Sherman Act. There are many ways we might be outside the law and
not realize that we are in danger. (Emphasis added.)
FNT 2. Quoted from Lipson,
Corplaw7 Commentaries, Antitrust in Action, Part 3 - Advice for Potential Defendants and Plaintiffs,
Pittsburgh Legal Journal, Vol.122, No. 97, p. 1 (May 21, 1996).END FNT
This incarcerated felon further advised his former colleagues that he planned to arrange an
antitrust seminar for them as soon as he was released. Such a seminar would obviously provide a
significant compliance incentive. But it is better to implement an all-inclusive, ongoing, and
effective antitrust compliance program before someone ends up in jail.
42

PUBLIC &amp; PRIVATE ENFORCEMENT OF THE ANTITRUST LAWS by Barry J. Lipson

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PUBLIC & PRIVATE ENFORCEMENT

SCOPE OF ANTITRUST LAWS [FROM 1996 CHAPTER 27 DRAFT*]

FEDERAL ENFORCEMENT ACTIVITY

STATE ATTORNEYS GENERAL

Justice Department, Antitrust Division.

Treble Damage Actions.

ANTITRUST COMPLIANCE PROGRAMS

SCOPE OF ANTITRUST LAWS

be engaged in small or large businesses, whether they be corporations, partnerships, joint

BACKGROUND AND PURPOSES

The Sherman Act was passed in response to the development of "trusts," or

that both the Congress and the federal judiciary lacked.

Providing the means of

Proving Contract, Combination, or Conspiracy

by either direct or circumstantial evidence.++1> It can be established by showing in a civil case

This has been called the Wink of the Eye

The focus for

PUBLIC & PRIVATE ENFORCEMENT OF THE ANTITRUST LAWS

as is the independent role of the Department of Justice

and the FTC.

FNT 3. See ''28:17 - 28:28.END FNT

is the current level of enforcement activity of these agencies.

Also considered in this chapter

FNT 4. See 28:29 - 28:32.END FNT

FNT 5. See '28:33.END FNT

See ''28:34 -28:39.END FNT

compliance programs. Such programs are briefly described in this chapter.

FNT 7. See ''28:40 -

II. SHARED FEDERAL AUTHORITY AND COOPERATION

FNT 1. 15 USC ''1 - 7.END FNT

is enforced exclusively by the

The agencies share authority to enforce the Clayton Act.

FNT 3. 15 USC ''12 -

to provide for a "cumulative remedy."

See 15 USC '18a.

For matters of concurrent jurisdiction, such as enforcement of Section 7 of the Clayton

The liaison agreement avoids

To foster international antitrust enforcement cooperation and coordination, the

Public Law 103-438

FNT 4. 338 Trade Reg Rep (Part 2) (CCH) 16 (October 18,

End Unfair Monopolistic Practices."END FNT

So far the United States has entered into antitrust

FNT 5. 338 Trade Reg Rep (Part 2) (CCH) 37

These Guidelines confirm the Department of Justice's 1992 policy

appears to be unlawful anticompetitive foreign restraints on United States exports; abandon, in

DEPARTMENT OF JUSTICE, ANTITRUST DIVISION

Role and Philosophy.

FNT 1 United States Department of Justice, Antitrust Division, Home

Page, hhtp://www._____.gov.END FNT

Business Review Procedure.

28 CFR '50.6.END FNT

Such investigations may also be

commenced on the Antitrust Division's own initiative.

Civil Investigative Demand.

15 USC ''1311 - 1314.END FNT

If oral testimony is required, counsel may be present, and the witness

15 USC '1312(I)(7).END FNT

FNT 4. See Petition of Gold Bond Stamp Co., 221 F

material obtained may be used in subsequent civil or criminal enforcement proceedings.

Amnesty and Cooperation.

that might otherwise have escaped prosecution.

FNT 2. Goals and Achievements of the Antitrust Division

FNT 3. See, e.g., Plea Agreement, United States v. Elkem

FNT 1. United States v. Armored Transport, Inc., 629

PUBLIC & PRIVATE ENFORCEMENT OF THE ANTITRUST LAWS by Barry J. Lipson

PUBLIC & PRIVATE ENFORCEMENT OF THE ANTITRUST LAWS by Barry J. Lipson