I have written in several venues advocating for reform of the antitrust sentencing guidelines. Last week I posted an article on the ABA Section of Antitrust Law’s website–Antitrust Connect. I signed on to Antitrust Connect when it was first rolled out, but frankly had not been taking advantage of it. A friend suggested that I check it out and post from time to time. I explored the site and realized it had a great deal of useful information about a full range of antitrust issues. I recommend it to others if you are a member of the ABA Antitrust Section. But, in case you did not see it on Antitrust Connect and are interested, below is a repost (with minor edits):
I have written before to express my opinion that the federal sentencing guidelines for antitrust violations do not fairly measure culpability. These guidelines should be revised. Several news items I’ve read recently have refocused me on this issue.
First, on November 10, 2014, the American Bar Association Criminal Justice Task Force on the Reform of Federal Sentencing for Economic Crimes released its final report on The Reform of Federal Sentencing for Economic Crimes. The proposed reforms shift sentencing away from a mere mechanical calculation of loss and incorporate more relevant views of culpability. The heart of the reform is to place less emphasis on the amount of the loss by reducing the number of loss brackets and reducing the amount the offense level would be increased in each bracket. The proposed guideline would add important new features such as:
- A “Culpability” table ranging from lowest to highest which could decrease or increase the offense level from “-10” to “+10.”
- A “Victim Impact” table of “Minimal to None” to “High” which could result in a range of “no increase” to “+6.”
- An offense level cap of 10 for non-serious offenses by first offenders.
For those really interested in the subject, you can read the recently released “Fraud, Bribery and Money Laundering Offences-Definitive Guidelines” issued by the Sentencing Council for England and Wales. These guidelines were issued in May and perhaps influenced the ABA Task Force guidelines because they also focus on “culpability” and “harm.”
Antitrust offenses are economic crimes. The antitrust sentencing guidelines are equally in need of reform to reduce the over weighted impact of volume of commerce (the proxy for loss). Antitrust guideline reform should also add offense characteristics that measure culpability and impact. And, I agree wholeheartedly with the Task Force report: “First, we feel more strongly about the structure of the proposal than we do the specific offense levels we have assigned.” I have made proposals to the Sentencing Commission to reform the antitrust guidelines. I have no doubt the proposals I made can be improved with input from the Antitrust Division, defense bar, judiciary and Sentencing Commission. My suggestions focus on three primary areas for reform:
- The 10-year Sherman Act maximum should be reserved for the most egregious situations such as recidivism or economic coercion. It is unjust that a low-level executive in an international cartel can reach the 10 year maximum based on the large volume of commerce.
- Volume of commerce should continue to be a relevant characteristic, but with a reduced impact. It should not be the overriding measure of culpability that it currently is.
- Presently, a CEO and Sales Manager are tagged with the same level of commerce (assuming similar time period in the conspiracy.) The volume of commerce adjustment should be applied only to defendants who had the authority to commit their company to the cartel.
I wrote a (too lengthy) letter to the Sentencing Commission outlining my concerns and suggestions. I have also written about the subject in previous Cartel Capers posts (here)(here). And my partner, Joan Marshall, and I wrote an article for Law 360 on the subject. I will keep highlighting the issue in the hope that if the members of the antitrust bar have similar feelings we might advocate for reform as effectively as has the American Bar Association Criminal Justice Task Force on the Reform of Federal Sentencing for Economic Crimes.
The last item I’d like to mention, because I think it highlights the issue, is the Antitrust Division’s appellate brief in U.S. v. Peake, Case 14-1088, (1st Cir. filed 10/9/2014). The brief in part addresses the guideline calculation for the record (Sherman Act count) 60 month sentence Peake received, which itself was a departure from the Antitrust Division’s “within guidelines” recommendation of 87 months. The volume of commerce adjustment is by far the most important factor in calculating a defendant’s jail sentence. Read these excerpts from the Division’s brief, which are no doubt correct statements of the law, and decide how relevant you think these factors are to how much time in prison a price fixer should spend.
- Courts have “adopted a broad reading of ‘affected’ [commerce] in line with the realities of the economic marketplace in which few things are ever truly ‘unaffected’ by other market forces,” because commerce can be affected “‘when the conspiracy merely acts upon or influences negotiations, sales prices, the volume of goods sold, or other transactional terms [so that] it is reasonable to conclude that all sales made by defendants during that period are ‘affected.'” (citations omitted) (p. 66)
- Peake further contends that certain categories of commerce should have been excluded because “there was no evidence” they were affected by the violation. But as the court found, the conspirators’ agreement to fix the bunker fuel surcharge “contaminated” every customer shipment between the U.S. mainland and Puerto Rico, including all categories of commerce challenged by Peake (p. 69)
- Peake contends that commerce with customers who the conspirators “never discussed” was unaffected because “there was no price-fixing or bid-rigging” for those who did not garner individualized attention from the co-conspirators, like the larger, “hall of fame” accounts. An affected commerce finding “does not require a sale-by-sale accounting.” (citations omitted). (p. 71)
Peake was a CEO, but keep in mind that the methodology for calculating volume of commerce is the same for the most and least culpable defendants. Hopefully, this will change as part of antitrust guideline reform.
Thanks for reading.