Section 1 of the Sherman Act(1) ("Act"), the primary federal antitrust provision, subjects to criminal sanctions any person "who shall make any contract or engage in any combination or conspiracy" in restraint of interstate commerce.(2) Despite the scope of its literal meaning, courts have held consistently that Congress intended [sections] 1 of the Act "to prohibit only unreasonable restraints of trade."(3) Although the Act applies to both criminal and civil offenses, it does not distinguish between the two.(4) This Article, however, concentrates on the criminal aspects of the Act.
Although Congress intentionally left the task of distinguishing between civil and criminal offenses to the judiciary,(5) the Act includes a number of common law terms to assist the courts in their task.(6) The lack of a clear legislative pronouncement of the differences in civil and criminal offenses has therefore resulted in the development of federal common law.(7) As such, the Supreme Court has characterized the Act as a "charter of freedom [with a] generality and adaptability comparable to that found to be desirable in constitutional provisions."(8)
This Article outlines the elements of an antitrust violation under [sections] 1 of the Act. Section II discusses the general elements of the offense. Section III presents the defenses to a charge of an antitrust violation. Section IV distinguishes between federal, state and international enforcement, Section V presents penalties, and Section VI discusses recent developments in international enforcement.
II. ELEMENTS OF THE OFFENSE
To prove a criminal violation of [sections] 1 of the Act, the government must establish four elements: (1) a combination or conspiracy formed by two or more entities; (2) an unreasonable restraint of trade or commerce by the combination or conspiracy;(9) (3) the interstate nature of the restrained trade or commerce;(10) and (4) general intent.(11) Parts A through D of this Section sequentially discuss sequentially each of these elements.
Under [sections] 1 of the Act, a conspiracy "must comprise an agreement, understanding or meeting of the minds between at least two competitors, for the purpose of, or with the effect of, unreasonably restraining trade."(12) The illegal agreement itself constitutes the offense; thus, neither completion of the conspiracy nor any overt acts furthering the conspiracy need be pleaded or proven in a case brought under the Act.(13) The venture's contractual form and ultimate success are immaterial as long as the parties form an illegal agreement.(14)
B. Restraint of Trade
The Supreme Court has noted that the term "restraint of trade ... refers not to a particular list of agreements, but to a particular economic consequence, which may be produced by quite different sorts of agreements in varying times and circumstances."(15) Such consequences include elimination of competition, creation of a monopoly, artificial maintenance of prices, or interference with the free play of market forces.(16)
In determining whether a given activity constitutes an unreasonable restraint of trade, courts have employed three analytical approaches. First, the "per se" rule, announced by the Supreme Court in United States v. Socony-Vacuum Oil Co.,(17) applies only to activities that have no legitimate justification and lack any redeeming competitive purpose.(18) Examples of such agreements include certain price-fixing arrangements,(19) allocation of markets,(20) and group boycotts.(21) The purpose of the per se unreasonableness test is to avoid time-consuming and costly investigation into the economics of agreements that are almost always anticompetitive, and have no procompetitive benefits.(22) Under the per se standard, therefore, the government need only prove the existence of an unlawful agreement.(23) "Virtually all" criminal prosecutions brought under the Act by U. …