Be Warned: Antitrust Laws Get Tough

By Hyder, Zakia | Folio: the Magazine for Magazine Management, August 1, 1991 | Go to article overview

Be Warned: Antitrust Laws Get Tough


Hyder, Zakia, Folio: the Magazine for Magazine Management


Sales practices-including those in print media-are being monitored more closely than ever by the Department of justice and state attorneys general in their crackdown on antitrust violations.

To add fat to the fire, Congress has raised penalties for violating antitrust laws to a historic high: Corporate fines, previously capped at a $1 million maximum, have been pushed up to a maximum of $10 million. individual fines have been increased from a $100,000 maximum and/or three years in prison to a $350,000 maximum and/or three years in prison. The new penalties became effective early this year.

In May, the justice Department's Sentencing Commission issued the revised guidelines to emphasize the new, stiffer penalties because many judges were still following the old sentencing guidelines. "These have a tremendous impact on judges," warns Gary Seligman, aide to Senator Howard Metzenbaum (D-Ohio), who has campaigned for the increased penalties. Most judgments are based on the guidelines."

The step-up in enforcement and tougher penalties could mean trouble for some sales reps and their companies. "It creates a difficult situation," says Kathyleen O'Brien, a media and litigation attorney at Los Angeles-based Sheppard, Mullin, Richter & Hampton. "Print is already losing ads to broadcast, and the down market demands an aggressive pitch," which can put salespeople afoul of the law. Trouble spots O'Brien notes that potential areas for antitrust violations include competitor agreements on rate structures, discounts, rebates, credit terms and customer preference.

Violations don't even have to stem from written documents or special meetings-even oral agreements or casual remarks can constitute antitrust activities. For example: "It is quite common for sales reps to exchange rate cards while socializing at a conference. It is also easy for a rep giving a speech to use examples of actual rate cards (his own and that of his competitor) or to speak of certain suppliers and customers," O'Brien warns.

If a law enforcement official witnessed or heard of these incidents, the people involved could find themselves, their companies, sales practices and supplier dealings subjects of an investigation.

According to Metzenbaum's aide, Seligman, salespeople need to realize that the new guidelines "make the penalty increase quite clear. They encourage judges to work within the new penalties, administering the highest fine available. Now if an individual is convicted, there is great likelihood that he will spend time in jail. …

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Be Warned: Antitrust Laws Get Tough
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