Nick Lotito & Seth Kirschenbaum

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The ins and outs of the Sherman Act

Competition is the foundation of the capitalist economy here in the United States. Our free market encourages innovation and fuels the development of products and services that enrich the lives of consumers throughout the country and here in Atlanta.

When it appears that a company or an individual is stifling that competitive spirit, the government might step in and make accusations that the country's antitrust laws are being violated. Three main antitrust laws govern fair trade in the United States, and while most violations are dealt with under civil law, criminal charges are possible under the Sherman Act.

What the Sherman Act prohibits

Congress passed the Sherman Act in 1890. Its purpose was to prevent an individual, company or group from having exclusive control over the sale or trade of a service or product (a monopoly). Federal and state governments could file charges based on the following perceived activities:

  • Price-fixing
  • Bid-rigging
  • Dividing markets or customers

Under the Sherman Act, these three activities are considered illegal and without justification. If you are accused of engaging in any of these activities, you could face criminal charges.

What penalties do you face under the Sherman Act?

If you are being accused of criminal violations of the Sherman Act, the governmental entity making the allegations believes that your actions were intentional. The Sherman Act outlines severe penalties for companies and individuals. The potential penalties differ for individuals versus corporations:

  • An individual could face up to 10 years in prison and financial penalties of up to $1 million.
  • The financial penalties for companies can be as high as $100 million.

Furthermore, if the court rules that the alleged perpetrator earned more than $100 million from these activities, fines only increase, sometimes up to double the amount earned. The fine could also be double the amount of money that the alleged victims lost due to violations of the Sherman Act.

Fortunately, the United States Supreme Court ruled, in the civil context, that not all acts that appear to restrain fair trade are unreasonable. Therefore, each case must be examined independently. That said, courts are not bound by a "one size fits all" approach to determining whether an individual or company has committed a civil violation of the Sherman Act. Bid rigging, price fixing and customer allocation schemes are viewed as unreasonable per se, and are nearly always prosecuted criminally. In some instances, companies and individuals who come forward may receive leniency, or amnesty, instead of being prosecuted. For this reason, it's crucial for you or your company to engage the services of an Atlanta attorney who understands the complexities of antitrust litigation.

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Nick Lotito & Seth Kirschenbaum

Former Federal Prosecutors

918 Ponce de Leon Avenue, N.E. Atlanta, GA 30306 Phone: 404-692-5168 Fax: 404-872-1622 Atlanta Law Office Map