Supreme Court Asked to Assess Per Se Rule Tension in Criminal Antitrust

Some notable recent cases in the financial arena have been criminally prosecuted under the Sherman Act. Two such cases include the acquittal last fall of three London-based foreign exchange traders tried in the Southern District of New York based on their participation in a chat room referred to as "the cartel" and the conviction just last month in the same court of former J.P. Morgan foreign exchange trader Akshay Aiyer. Justices on both ends of the Supreme Court's ideological spectrum, animated perhaps by the criminal law jurisprudence of the late Justice Antonin Scalia, have shown marked hostility to judge-made rules that stray beyond the statutory text or trench upon the jury's role in finding every element of a crime. With Justices Neil Gorsuch and Brett Kavanaugh now in the mix, the Sanchez petition offers an intriguing test of how far the court may be willing to press these principles in the face of longstanding precedent.

The Per Se Rule

Section 1 of the Sherman Act declares illegal "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce …." Passed in the heyday of the common law, the broad language of the Act is often viewed as in effect a directive to the courts to develop a common law of fair competition. In the seminal case interpreting the Act, Standard Oil Co. v. United States, 221 U.S. 1 (1911), the Supreme Court held that the Act required a standard of interpretation of the "rule of reason," meaning that only agreements that unreasonably restrain trade are prohibited. As the case law interpreting the Sherman Act has evolved, the legal assessment of reasonableness typically entails a complex and detailed economic analysis that weighs any pro-competitive and anti-competitive impacts of the conduct in its specific market context. Under the per se rule, however, if the agreement is determined to fall into certain defined categories — now limited to price fixing, customer allocation, or bid-rigging — no consideration is given to any claimed efficiency enhancing or pro-competitive justification of the conduct. As a matter of law, agreements falling into such categories are presumed to pose such a great risk of anti-competitive impact and to have so little likelihood of pro-competitive or legitimate efficiency enhancing benefit as to be per se unreasonable. In these cases, no assessment of claimed positive impact is required or permitted.

History of Criminal Sherman Act Enforcement

An amicus brief filed by the National Association of Criminal Defense Lawyers in support of the Sanchez certiorari petition traces how modern criminal antitrust enforcement has evolved as something of an overlay to a statute and common law doctrines that were primarily intended for, and long primarily enforced in, the civil context. Indeed, the original legislation proposed by Senator Sherman was intended as a broadly construed "remedial statute" providing that anticompetitive agreements be subject to private actions for double damages and civil forfeiture actions by the government. Sherman intended the statute to be a "bill of rights, a charter of liberty." After wending its way through various committees of both the House and Senate, where attempts were made and then withdrawn to actually define the evil legislated against — "trusts" — the law that emerged, still with broad, undefined language, nevertheless included a provision that allowed for criminal misdemeanor liability. The bill's legislative history recognized that the broad terms of the statute would need to be defined by the courts: The author of the House Judiciary Committee report on the bill admitted that neither he "nor any man could know just what contracts" will be barred by the law "until the courts determine." The NACDL brief quotes one supporting representative referring to the bill as "experimental" and "blind legislation" through "a bill of which no one can tell the meaning"; he asked in the floor debate: "Was ever criminal law made in this fashion before?"