The DOJ reinvigorates criminal enforcement of Section 2 of the Sherman Act
In July 2021 President Biden issued a landmark Executive Order on Competition. “The heart of American capitalism,” the President explained, “is a simple idea: open and fair competition.” But he also warned that “capitalism without competition isn’t capitalism; it’s exploitation.” He stressed that competition challenges ripple across our economy, harming not just “consumer welfare,” which is the touchstone of the Chicago School of antitrust that focuses on output and consumer prices, but farmers, workers, and small businesses as well-- our economic growth and competitiveness. Specifically, the Executive Order called on the federal antitrust enforcement agencies—the Antitrust Division of the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”)—to fully and vigorously enforce our antitrust laws. He noted in particular the need for the enforcement agencies to think forward to new industries and new technologies—including the challenges posed by the rise of the dominant Internet platforms. In the President’s view, a market with more competitors is usually better equipped to handle disruptions and deliver what they need not just to consumers, but also to farmers, businesses, and workers.
The DOJ’s current criminal enforcement warnings
Both antitrust enforcement agencies have responded in the form of cases challenging “Big Tech” anticompetitive conduct. This article will address a topic that has been the focus of signficant DOJ comments: warnings about possible criminal charges under Section 2 of the Sherman Act against unilateral conduct by dominant companies. The DOJ’s landmark 2020 lawsuit against Google over its search policies in fact was the first monopoly case brought by DOJ in two decades; but it was a civil suit. Recent statements have expanded possible future monopoly enforcement actions to criminal suits.
The emphasized focus on monopolistic conduct in “Big Tech” as such started in the first solo speech by Jonathan Kanter after his appointment as Assistant Attorney General in charge of the DOJ’s Antitrust Division a year ago. He stressed in January 2022:
One area where there’s been a growing divide between antitrust doctrine and market realities is Section 2 of the Sherman Act. Approximately 20 years passed between the filing of major DOJ monopolization cases, even as competition languished in vital industries. The result is that there is a dearth of Section 2 case law addressing modern markets.
For example, there are an increasing number of markets where competition is not reflected merely, or primarily, in consumer prices or output. Antitrust doctrine must, therefore, account for the many ways that the process of competition is important. Competition brings benefits that include: improved quality; greater choice of products and services; incentives to innovate; the empowerment of workers to negotiate better working conditions or to switch jobs; and the flow of information and news, which is vital to the health of a functioning democracy. . . .
Section 2 doctrine that is responsive to market realities, not outdated models, is a necessary step to build a competitive economy.
Richard Powers, then DOJ’s deputy for criminal enforcement, elaborated on Kanter's position early in March. In response to an inquiry about the possibility of criminal monopolization cases, he declared:
Congress made violations of the Sherman Act, both Section 1 and Section 2, a crime… and Section 2 is a felony just like Section 1, and that’s been true since the 1970s," . . . . Historically the division did not shy away from bringing criminal monopolization charges, and frequently alongside Section 1 charges, when companies and executives committed flagrant offenses intended to monopolize markets.
He added that Kanter’s commitment to using “all available tools” in antitrust enforcement "informs all aspects of our work . . . and in my view it’s at least as important – if not more so – when it comes to criminal enforcement and our obligations to deter the worst, most flagrant types of anticompetitive conduct."
Powers concluded: "So what does that mean? If the facts and the law lead us to the conclusion that a criminal charge based on a Section 2 violation is warranted, then that’s what we’ll do, we’ll charge it."
A few weeks later, Kanter responded to a question at the ABA Antitrust Section’s Spring Meeting Enforcers Roundtable as to whether criminal charges under Section 2 were among the DOJ’s current enforcement “toolbox” as follows:
Before United States v. Google, the last major Section 2 case that was brought and litigated to a decision by the Department of Justice was United States v. Microsoft, and that was filed in 1998. We have seen Section 2 essentially get to a point where it was on life support. We are changing that on the civil side; but let’s not forget Section 2, as Congress wrote it, was written as a criminal statute. It was a criminal statute starting in 1890, it was a felony starting in the 1970s, and the penalties have been updated as recently as in the 2000s. This is the will of Congress; this is how Congress wrote it. In terms of guidance, what I would say right now is there are a lot of talented lawyers out in the audience—I know many of them—my guidance is to read the cases. There’s over a century of case law relating to criminal antitrust enforcement of Section 1 and Section 2. We will pursue criminal violations when the facts and the law suggest it’s appropriate and consistent with the principles of federal criminal prosecution.
Finally, on September 20, Kanter testified before the Senate Judiciary Committee, saying the following with respect to monopolization enforcement, without indicating whether the DOJ is considering bringing criminal, rather than civil, cases:
The Division is making it a priority to revitalize monopolization enforcement. This is an area where, unfortunately, there has been a growing divide between antitrust doctrine and market realities. Until the Division brought its Google monopolization suit in 2020, approximately 20 years had passed between the filing of major Justice Department monopolization cases, even as competition languished in vital industries. The result is that there is a dearth of Section 2 case law addressing modern markets, despite the myriad ways in which the digital revolution has transformed our entire economy.
The highway crack-sealing services attempt to monopolize suit
Ten days after Kanter testified before the Judiciary Committee, on September 30th, the DOJ in fact actually took action, filing a criminal attempt to monopolize suit, along with a guilty plea, although not in a matter involving “big tech. The charge was against the president of a paving and asphalt contractor based in Billings, Montana, alleged to have attempted—unsuccessfully-- to monopolize the market for highway crack-sealing services in Montana and Wyoming, by proposing to a competitor that his company and the competitor allocate regional markets. In response to the offer, however, Zito's competitor reported the call to the U.S. Department of Transportation's Office of Inspector General. Enforcers then used the rival's cooperation to record subsequent phone calls with Zito, and the criminal suit against Zito then was brought. Zito pleaded guilty and has agreed to a $27,000 criminal fine. He is set to be sentenced in February.
Assistant Attorney General Kanter commented on last month’s highway crack-sealing services case: “Congress criminalized monopolization and attempted monopolization to combat criminal conduct that subverts competition. The Justice Department will continue to prosecute blatant and illegitimate monopoly behavior that subjects the American public to harm.” Of course, his earlier warnings likely were directed at conduct by companies considerably larger than a paving and asphalt contractor serving two small western states.
DOJ Section 2 criminal enforcement policy prior to the 1980s
The text of Section 2 of the Sherman Act, as the DOJ officials have emphasized, specifically provides that anyone who “shall monopolize, or attempt to monopolize, or combine or conspire” with anyone else “shall be deemed guilty of a felony and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments. . . .”
Despite this statutory authority, DOJ policy since the 1970s, as reflected in is Manual (reportedly in the process of being revised), limits criminal investigations and prosecution to cases involving per se unlawful horizontal agreements such as price fixing, bid rigging, and customer and territorial market divisions. So the Kanter and Powers statements earlier this year certainly depart from that written policy.
The fact is, however, that the DOJ has in the past brought criminal monopolization cases although, before last month, not in the last 40 years. In its landmark 1946 ruling in American Tobacco Co. v. United States, affirming the convictions of several tobacco companies for jointly monopolizing, attempting to monopolize, and conspiring to monopolize the market, the Supreme Court announced the following requirements:
A correct interpretation of the statute and of the authorities makes it the crime of monopolizing, under s 2 of the Sherman Act, for parties, as in these cases, to combine or conspire to acquire or maintain the power to exclude competitors from any part of the trade or commerce among the several states or with foreign nations, provided they also have such a power that they are able, as a group, to exclude actual or potential competition from the field and provided that they have the intent and purpose to exercise that power.
Moreover, the Supreme Court stressed that "[n]either proof of exertion of the power to exclude nor proof of actual exclusion of existing or potential competitors" was necessary for a violation. Going even further, the Court added that a defendant may be convicted of a conspiracy to monopolize "without ever having acquired the power to carry out the object of the conspiracy, i.e., to exclude actual and potential competitors." 
The three most recent criminal Section 2 cases prior to last month were all brought in the 1970s. However, each of the complaints also included either a traditional conspiracy claim under Section 1 of the Sherman Act, or egregious criminal conduct of a completely different nature. The results were mixed, with individual defendants actually sentenced to prison time in only one of the cases.
The first of the cases, United States v. Dunham Concrete Products, Inc. decided by the Fifth Circuit in 1973, is the one in which trial convictions were affirmed. Three alleged co-conspiring corporations were fined, and a corporate official was sentenced to a jail term. Significantly, the claim that defendants attempted to monopolize specified concrete markets was accompanied by serious criminal claims that they also had violated the Hobbs Act by attempting to obtain property through physical violence.
The second of the 1970s criminal Section 2 cases was United States v. General Motors Corp. There the DOJ claimed that General Motors and co-defendant Ford had engaged in both a conspiracy to monopolize the automobile fleet market in violation of Section 2 of the Sherman Act, but also a horizontal price fixing conspiracy in violation of Section 1 of the Sherman Act. Accordingly, in view of the criminal Section 1 claim, the Section 2 claim was somewhat superfluous. Moreover, shared monopoly claims have never been judicially approved. The jury acquitted the defendants with respect to the Section 1 conspiracy claim. The defendants moved for dismissal of the conspiracy to monopolize claim, and the Judge ruled in their favor essentially on the basis of the absence of proof as to specific intent to monopolize. In doing so, the judge stressed:
At this point the court notes a dilemma that has burdened the government throughout the case. In Count I it charged the defendants with a conspiracy to fix prices by raising them while in Count II it charged the defendants with a conspiracy to monopolize, that is, to exclude competitors. The government thus put itself into the difficult position of having to prove that the defendants’ general intent to conspire to raise prices was coupled with a specific intent to exclude competitors. This is contrary to common sense and experience. Even in an industry where there are few suppliers, price raising by some is bound to lead to increased sales by the others.
The final 1970s case was United States v. Braniff Airways, Inc., decided in 1978. As in the General Motors case, the DOJ brought both a criminal conspiracy claim under Section 1 along with a criminal conspiracy to monopolize claim under Section 2. There was no individual monopolization or attempt to monopolize claim. Specifically, Braniff and Texas International Airlines had been indicted for conspiring to prevent Southwest Airlines from increasing its presence in major Texas cities by exchanging flight schedules, ticket fees, and other competitive information allegedly to prevent customers from re‐booking flights on Southwest. After the court denied both of the defendants’ motions to dismiss, Texas International pleaded guilty and Braniff entered a no contest plea. Both were fined $100,000.
Until last month’s criminal case involving small companies, no criminal cases have been brought under Section 2 of the Sherman Act by the DOJ since the 1970s. However, a number of significant civil suits have been brought by the DOJ, primarily with success. There is of course a major civil monopolization/attempt to monopolize suit brought by the DOJ and eleven states against Google pending in the District Court for the District of Columbia.
What might be expected in terms of future DOJ Section 2 enforcement
The recent statements by Jonathan Kanter and other DOJ officials threatening criminal prosecution under Section 2 differs from the formal approach the DOJ adopted when it announced—along with the FTC-- a new policy with respect to so‐called “no poach” or “wage‐fixing” agreements. There, the two enforcement authorities issued a formal policy announcement in 2016 entitled “Guidance for Human Resource Professionals,” stating that thereafter the DOJ would criminally prosecute anticompetitive “no poach” and other “wage‐fixing” agreements under Section 1 of the Sherman Act. It was noted that the policy would not apply retroactively, and that DOJ would not criminally prosecute companies for the such agreements that had completely terminated before issuance of the Guidance. Of interest, some defendants indeed have contended (unsuccessfully so far) that criminal prosecution of the challenged conduct was unconstitutional because the 2016 Guidance was insufficient to provide fair notice of criminal risk to the defendants. DOJ to date has not issued any formal guidance about its stated intent to criminally prosecute individual defendants under Section 2 of the Sherman Act. Actually, some judicial guidance about the requirements for single company suits under Section 2 in fact has been provided, albeit in the context of a DOJ civil suit, in the D.C. Circuit’s en banc Microsoft decision in 2001:
First, to be condemned as exclusionary, a monopolist's act must have an "anticompetitive effect." That is, it must harm the competitive process and thereby harm consumers. In contrast, harm to one or more competitors will not suffice. . . .
Second, the plaintiff, on whom the burden of proof of course rests . . . must demonstrate that the monopolist's conduct indeed has the requisite anticompetitive effect. . . . no less in a case brought by the Government, it must demonstrate that the monopolist's conduct harmed competition, not just a competitor.
Third, if a plaintiff successfully establishes a prima facie case under § 2 by demonstrating anticompetitive effect, then the monopolist may proffer a "procompetitive justification" for its conduct. . . .
Fourth, if the monopolist's pro-competitive justification stands unrebutted, then the plaintiff must demonstrate that the anticompetitive harm of the conduct outweighs the procompetitive benefit. In cases arising under § 1 of the Sherman Act, the courts routinely apply a similar balancing approach under the rubric of the "rule of reason." . . . .As the Fifth Circuit more recently explained, "[i]t is clear . . . that the analysis under section 2 is similar to that under section 1 regardless whether the rule of reason label is applied. . . ." Mid-Texas Communications Sys., Inc. v. ATT, 615 F.2d 1372, 1389 n.13 (5th Cir. 1980). . . .
Finally, in considering whether the monopolist's conduct on balance harms competition and is therefore condemned as exclusionary for purposes of § 2, our focus is upon the effect of that conduct, not upon the intent behind it. Evidence of the intent behind the conduct of a monopolist is relevant only to the extent it helps us understand the likely effect of the monopolist's conduct.
Particular note should be given to the D.C. Circuit’s statement in Microsoft that "[i]t is clear . . . that the analysis under section 2 is similar to that under section 1 regardless whether the rule of reason label is applied. . . ."
Of course, as previously noted, unlike monopolization cases involving single-firm conduct, conspiracies to monopolize are per se unlawful, and defendants may be convicted of a conspiracy to monopolize "without ever having acquired the power to carry out the object of the conspiracy, i.e., to exclude actual and potential competitors," according to the Supreme Court’s American Tobacco decision. Accordingly, only time will tell whether DOJ will bring significant criminal individual defendant suits under Section 2 of the Sherman Act.
*Irving Scher is Senior Counsel in the firm's New York office.
 Remarks by President Biden at Signing of an Executive Order Promoting Competition in the American Economy, White House (July 9, 2021), https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/07/09/remarks-by-president-biden-at-signing-of-an-executive-order-promoting-competition-in-the-american-economy.
 Jonathan Kanter, Assistant Att'y Gen., U.S. Dep't of Just., Assistant Attorney General Jonathan Kanter of the Antitrust Division Delivers Remarks to the New York State Bar Association Antitrust Section (Jan. 24, 2022), available at https://www.justice.gov/opa/speech/assistant-attorney-general-jonathan-kanter-antitrust-division-delivers-remarks-new-york.
 "American Bar Association White Collar Crime 2022," San Francisco, March 2-4, 2022.
 ABA Antitrust Section, Spring Meeting Enforcers Roundtable (April 8, 2022).
 See Dept. of Justice, Assistant Attorney General Jonathan Kanter of the Antitrust Division Testifies Before the Senate Judiciary Committee Hearing on Competition Policy, Antitrust, and Consumer Rights (September 20, 2022).
 Dep’t of Justice Press Release, Executive Pleads Guilty to Criminal Attempted Monopolization, October 31, 2022. The facts are reminiscent of those alleged in United States v. American Airlines, Inc., 743 F.2d 1114 (5th Cir. 1984), in which the president of American Airlines allegedly proposed to the president of Braniff that each airline raise its prices by 20 percent. The Braniff president presented a recording of the conversation to the DOJ, which brought suit against American Airlines claiming successfully that it had attempted to monopolize the market in violation of § 2 of the Sherman Act.
 U.S. Dep't of Justice, Antitrust Division Manual, Chapter III, Part C.1 (Fifth ed.).
 328 U.S. 781 (1946). See also United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945).
 Id. at 809.
 Id. at 810.
 Id. at 789.
 475 F.2d 1241, 1242 (5th Cir. 1973).
 United States v. Empire Gas Co., 393 F. Supp. 903, 912 (W.D. Mo. 1975), has at times improperly been characterized as a criminal case in which it was found that the defendant had attempted to monopolize a liquified petroleum gas market, inter alia, by destroying a competitor’s property. In fact, the company had earlier been acquitted of such a criminal claim, Crim. No. 23917-1, and the 1975 decision involved a follow-on civil bench trial that included the same claims. The judge ruled favorably for Empire Gas on all of the claims on the basis of a failure of proof.
 369 F. Supp. 1306 (E.D. Mich. 1974).
 Id. at 1311.
 453 F. Supp. 724 (W.D. Tex. 1978).
 Id. at 728‐29 (“What is challenged is defendants' seeking, pursuant to a continuing agreement, understanding and concert of action, to impair the ability of Southwest Airlines to commence and maintain operations in competition with them in the tri‐city intrastate market of Texas and thereafter to eliminate Southwest from that market. The essence of the indictment, therefore, is that defendants conspired to eliminate Southwest and to thereafter monopolize the intrastate market.”).
See N.Y. Times, “Braniff Fined In Trust Case” (Dec. 28, 1978), available at https://www.nytimes.com/1978/12/28/archives/braniff‐fined‐in‐trust‐case.html.
 Although Cuisinarts was indicted in 1980 for allegedly engaging in resale price maintenance, the Division in fact filed a civil suit against the company, which entered into a consent decree only containing injunctive and other equitable relief. See United States v. Cuisinarts, Inc., 1981 WL 2062 (D. Ct. Mar. 26, 1981).
 See United States v. Dentsply Int’l, Inc., 399 F.3d 181 (3d Cir. 2005) (monopolization claim established); United States v. Microsoft Corp., 253 F.3d34 (D.C. Cir.)(en banc)(per curiam)(monopolization claim established); United States v. AMR Corp., 335 F.3d 1109 (10th Cir. 2003)(predatory pricing monopolization claim rejected); (United States v. American Airlines, Inc., 743 F.2d 1114 (5th Cir. 1984) (attempt to monopolize claim established).
 United States v. Google LLC, No. 1:20-cv-3010 (D.D.C. Oct. 20, 2020) (Compl.); Press Release, DOJ, Statement of the Attorney General on the Announcement Of Civil Antitrust Lawsuit Filed Against Google (Oct. 20, 2020), https://www.justice.gov/opa/pr/statement-attorney-general-announcement-civil-antitrust-lawsuit-filed-against-google.
 Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidance for Human Resources Professionals (Oct. 2016), at 3‐4 (“Going forward, the DOJ intends to proceed criminally against naked wage‐fixing or no‐poaching agreements.”), available at https://www.justice.gov/atr/file/903511/download.
 United States v. Microsoft Corp., 253 F.3d 34, 58‐59 (D.C. Cir. 2001) (en banc) (per curiam)
 328 U.S. at 739.