“Every Contract Restrains Trade” I Humbly Disagree: A Different Point of View

December 19, 2025 by Bob Connolly

On December 1 2025, I had finished an article about how the defendant might avoid the application of the per se rule in his upcoming trial for allegedly rigging a bid for a multi-million dollar entertainment facility for a public university in Texas. On December 2, 2025, the President pardoned the defendant. My article did not predict a pretrial Presidential pardon. The article, slightly modified after the pardon, is posted on SSRN: Per Se Rule Related Defenses In Criminal Antitrust Prosecutions, December 10, 2025.

I was thinking of posting excerpts from the article on Cartel Capers and a happy coincidence occurred today. Somone sent me the DOJ Statement of Interest in In Re: Apple Smartphone Antitrust Litigation, Case No. 2:24-md-03113, (D. N.J. June 7, 2024), ECF No 147, filed 12/16/2025. The Statement of Interest argues that United States v. Brewbaker, 87 F. 4^th563 (4^th Cir. 2023) was wrongly decided. I agree. Another of the topics in the filing is: “All contracts are concerted action.” The paragraph begins with “By its terms, Section 1 applies to ‘every contract…in restraint of…trade.’ And the Supreme Court long has recognized that every contract restrains trade.” See Bd. Of Trade of Chi v. United States, 246 U.S. 231, 238 (1918) (“Every agreement concerning trade…restrains.”). The Statement of Interest cites other cases for this blackletter law proposition.

In my article I argued that it was unnecessary judicial legislation to modify “restraint of trade” with “unreasonable” because not every contract restrains trade. Am I correct? It happens sometimes. But it’s fairly inconsequential because either way you read Section One, the issue in the case will be whether the agreement in question restrained trade.

Below is the relevant excerpt from my article.

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Some Per Se Rule History: The Road Wrongly Traveled

It is well accepted, but incorrect, that “One problem presented by the language of § 1 of the Sherman Act is that it cannot mean what it says.”[1] This erroneous belief has led the Supreme Court to amend the Sherman Act, first by adding the word “unreasonable” before “restraint of trade”[2] and then by creating two rules: the per se rule and the rule of reason.[3] In doing so the Supreme Court has engaged in unconstitutional judicial legislation.[4] As Justice Gorsuch has said, “If a statute needs repair, there’s a constitutionally prescribed way to do it. It’s called legislation.”[5]But Section 1 of the Sherman Act does not need to be rewritten. To restrain is “to limit” or “to hold back.”[6] Contracts between individuals do not restrain trade in the most natural, ordinary, common sense meaning of the words. It is a rule of statutory construction not to give words an implausible interpretation.[7] A literal reading of the words of the statute which would lead to absurd results is to be avoided when they can be given a reasonable application consistent with their words and with the legislative purpose.[8] Did Senator Sherman intend that if he entered a contract to buy oil to heat his home, he was a criminal? No. It is clear that Congress did not intend to criminalize all commercial contracts, including their own. Moreover, if the drafters intended that all commercial contracts are a restraint of trade, the Sherman Act would simply read, “all agreements in trade are illegal.” But since Congress added the qualifier “in restraint of trade” it rejected the idea that all contracts restrain trade. The statutory construction surplusage canon means Congress added “restraint of trade” for a reason—to limit the notion that all contracts restrain trade.[9]

The “trade” the Sherman Act refers to is what we now call a market—not a single transaction between two parties. Exhibit A, as said by Adam Smith, is perhaps the most famous quote in the antitrust world: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”[10] (emphasis added). It is clear that Congress used the term “trade” as Smith did, in describing a market—not a contract between two parties. The great trusts of the day motivated passage of the Sherman Act: the Sugar Trust, Oil Trust, and Banking Trust, and others[11] did restrain trade. Thus, there was no reason for the Supreme Court to rewrite the Sherman Act and create the per se rule and rule of reason.

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I’d appreacite any reaction. Thanks for reading.

Bob Connolly bob@reconnollylaw.com

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[1] National Society of Professional Engineers v. United States, 435 U.S. 679, 688 (1978.) See also, Standard Oil Co. of N.J. v. United States, 221 U.S. 1, 63 (1911) (without the standard of reason to limit the language, “the statute would be destructive of all right to contract or agree or combine in any respect whatever.” Board of Trade of City of Chicago v. United States, 246 U.S. 231, 238 (1918) (“Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence.”).

[2] Standard Oil v. United States, 221 U.S. 1 (1911).

[3] United Sates v. Trenton Potteries Co. 273 U.S. 392, 398 (1927)(per se); Bd. Of Trade of City of Chicago v. United States, 246 US. 231 (1918) (rule of reason).

[4] In a dissent in Standard Oil v. United States,, 221 U.S. 1 (1911) Justice Harlan objected that the Court, rather than Congress, amended the legislation. Justice Harlan wrote that the Court “has now done what it then said it could not constitutionally do. It has, by mere interpretation, modified the act of Congress.” Id. at 99. (Justice Harlan dissenting). For more detail and color, see, William Kolaksy, Chief Justice Edward Douglass White And the Birth of the Rule of Reason, Antitrust, Vol. 24, No. 3, p. 77, (On the bench, Harlan was even harsher. Those present in thecourtroom reported that Harlan “[h]aving refreshed himself with whiskey . . . denounced his colleagues from the bench in improvised language that is said to have made them blush.”).

[5] Perry v. Merit Systems Protection Board, 137 S. Ct. 1975, 1990 (2017) (Gorsuch dissenting).

[6] Merriam Webster Dictionary: 1a: an act of restraining: the state of being restrained

b(1): a means of restraining : a restraining force or influence

(2): a device that restricts movement., available at https://www.merriam-webster.com/dictionary/restraint.

[7] See Advocate Health Care Network, et al v. Stapleton, 581 U.S. 468, 480 (2017) (“Congress, we feel sure, would not have intended all National Guardsmen to get a benefit that is otherwise reserved for disabled veterans.”).

[8] See Haggar Co. v. Helvering, 308 U.S. 389, 394 (1940).

[9] “A corollary to this point is that the employees’ construction runs aground on the so-called surplusage canon—the presumption that each word Congress uses is there for a reason.” Advoc. Health Care Network v. Stapleton, 581 U.S. 468, 477 (2017).

[10] Adam Smith: The Wealth of Nations (1776), Book I, Chapter X, Part II, p. 152.

[11] “In 1882 S. C. T. Dodd, an attorney for John Rockefeller’s Standard Oil Co., created a trust to facilitate a tight combination of oil refiners that could dictate price and supply while also avoiding state-level taxes and corporate regulations. The use of trusts for industrial consolidation multiplied throughout the 1880s, and in response, several states and the federal government passed antitrust laws to regulate business competition, focusing on coordination among firms and business tactics used to monopolize industries.” Laura Phillips Sawyer, US Antitrust Law and Policy in Historical Perspective, Harvard Business School Working Paper, 19-110 (2019), available at https://www.hbs.edu/faculty/Publication%20Files/19-110_e21447ad-d98a-451f-8ef0-ba42209018e6.pdf.

New Article: Per Se Rule Related Defenses In Criminal Antitrust Prosecutions

December 15, 2025 by Bob Connolly

As I posted last week, I had written an article, with the help of Erin Lyman, a third year student at the University of Wisconsin Law School, discussing the per se rule and the various ways the defense may attack it in pretrial motions, and throughout the proceeding, including appeal should the defendant be convicted. The article was about to be published when the defendant received a full Presidential pardon. The issues raised concerning the use of the per se rule in criminal antitrust trials are likely to come up again so I have retooled the article a bit and posted it on SSRN: Per Se Rule Related Defenses In Criminal Antitrust Prosecutions, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5895764, posted December 10, 2025.

The article uses as a lens, an indictment the Antitrust Division returned alleging a per se Section One violation for this agreement:

The charge in this Indictment arises from a scheme in which Defendant conspired with a competitor to rig the bidding to develop, manage, and operate an arena at a public university in Austin, Texas (the “Arena Project”). Specifically, the Defendant and a competitor agreed that the competitor would stand down and neither submit nor join an independent competing bid so that Defendant’s company would win the Arena Project and derive its economic benefits. In exchange for the competitor’s standing down, Defendant represented that the competitor would receive certain subcontracts for the Arena Project and other consideration.

The Defendant indicated that he would not deny an understanding with the alleged competitor but claimed it was procompetitive consortium building on the large project.

My SSRN paper covers three possible scenarios that might have come up had the defendant been brought to trial. First, citing the Fourth Circuit’s decision in Unted States v. Brewbaker, 87 F. 4^th 563 (4^th Cir. 2023), the defendant could have argued that the indictment did not allege a per se violation. The defense would have argued the defendant the indictment merely sets forth lawful, ethical and procompetitive efforts of complementary businesses joining forces to deliver a compelling proposal to the customer. The legal argument would be an agreement to form a consortium/joint venture is well-recognized as having a potential precompetitive impact and is outside the kind of agreement the Supreme Court has included in the per se category. Secondly, should the case have advanced to trial and jury, the defendant could argue, based on United States v. DaVita, that the court should reject the government’s standard per se jury instruction and instead, require the jury to find “beyond a reasonable doubt that defendant entered into an agreement with the purpose of …[rigging the bid]. See United States v Davita Inc., No. 1:21-CR-00229-RBJ, 2022 WL 1288585, at *1 (D. Colo. Mar. 25, 2022). Finally, if convicted, the defendant could appeal and argue that the per se rule is unconstitutional when applied in a criminal trial.

I’ve been writing about the per se rule for many years so some of the ideas/material in the article are “reprints.” I have, however, added new material. I am going to post some of the writing I think is perhaps more interesting on the blog over the next several days.

Thanks for reading.

Bob Connolly bob@reconnollylaw.com

Brewbaker Strikes Back: The DOJ’s Per Se “Death Star” Attacked

August 13, 2024 by Bob Connolly

No jail sentences were imposed on individual defendants convicted in the 1940 Supreme Court case of United States v. Socony Vacuum Oil Co. The individuals were each fined $1,000. In 2014, Romano Pisciotti, an Italian citizen, was indicted under seal for violating Section One of the Sherman Act, seized by Interpol while changing planes in Germany and eventually extradited to the United States.[1] Even before conviction:

Romano Pisciotti spent 669 days in custody. This included two hours in a police station in Lugano, Switzerland; 10 months in a jail in Frankfurt, Germany fighting extradition [on a Sherman Act indictment]; and eight months in a US federal prison in Folkston, Georgia, in a room with around 40 mainly Mexican inmates and a single corner toilet.” [2]

This is no longer your grandfather’s “gentleman’s crime” with a slap on the wrist (wallet).[3]

The law has also developed since Socony Vacuum. Today’s textualist Supreme Court is unlikely to agree that three words “restraint of trade” gives rise to two distinct rules: the per se rule and the rule of reason. If the Sherman Act truly could not possibly mean what it says, [because it would outlaw all commercial contracts], this Court would likely say the remedy is with Congress. As Justice Gorsuch wrote in his dissent in Perry v. Merit Systems Protection Board: “If a statute needs repair, there’s a constitutionally prescribed way to do it. It’s called legislation.”[4] Finally, the Supreme Court has been vigilant to protect defendant’s constitutional rights, including proving every element of the offense. The Supreme Court may well find that the per se rule which allows the trial court, not the jury, to make the factual finding that an agreement restrains trade, is unconstitutional.

Is It Time for the Supreme Court to Review the Constitutionality of the Per Se Rule?

Brent Brewbaker thinks so; that is if the Supreme Court accepts the Department of Justice’s cert petition. Cartel Capers, DOJ Filed Cert Petition in US v. Brewbaker, July 15, 2024. The DOJ presented the question: “Whether the existence of a vertical relationship between the competing bidders precluded the application of the established per se rule against horizontal bid rigging to [Brewbaker’s] conduct.” Brewbaker fired back presenting this question: “Does the criminal provision of Section 1 of the Sherman Act violate Article 1 of, and the Fifth and Sixth Amendments to, the United States Constitution?” Brewbaker v. United States, Conditional Cross-Petition for Writ of Certiorari, No. 23-1365, filed August 5, 2024.

Justice Gorsuch has recently argued that the United States has too many laws. “Americans are ‘getting whacked’ by too many laws and regulations: Justice Gorsuch”, Mark Sherman, ABC News, August 4, 2024. In all these laws is there any criminal statute where the court, after having considerable experience with a type of scheme, can instruct the jury, “Don’t worry about that element of the offense, I’ve seen this one before.” Even if a certain type of restraint always or almost always restrains trade, doesn’t the constitution require that the defense be allowed to argue: “Your Honor, the defendant understands that this agreement looks like the type that restrains trade but, nonetheless, we’d like to dispense with the per se short cut and assert our conditional right that the government prove beyond a reasonable that this agreement restrained trade.” See The End Is Near For the Per Se Rule in Criminal Antitrust Prosecutions, Cartel Capers, March 21, 2019.[5] This is not an exaggeration (well, maybe a little) but the per se rule “avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable….”[6] But juries in criminal cases are constitutionally charged with making the determination of whether an agreement restrained trade even if it slows trials down or seems futile. The Federal Rules of Evidence, not conclusive presumptions, can limit the scope of the evidence. Per se rules have a place in civil litigation where the court is a fact finder (i.e. summary judgment), but not in criminal prosecutions

Another point made in Brewbaker’s cross petition is that Section One of the Sherman Act lacks objective standards and impermissibly allows the courts to define the contours of prohibited conduct. It’s hard to argue with that since, without a single vote by Congress, the Supreme Court has a history of creating and then dismantling per se rules:

Restraint Per Se Born Per Se Deceased

Vertical Minimum Price Fixing 1911[7] 2007[8]

Vertical Non-Price Restraints 1967[9] 1977[10]

Vertical Maximum Price-fixing Agreements 1968[11] 1997[12]

Group Boycotts 1959[13] 1985[14] (life support)

Tying 1947[15] 1992[16] (life support)

The DOJ took a chance in petitioning for cert in this case arguing that the 4^th Circuit was in error for not applying the per se rule to the indictment. The DOJ must have seen this possibility and was willing to take the chance. The argument against the per se rule is evident in the DOJ’s cert petition where it describes the factual finding the trial court, not the jury, should have made and then used to apply the per se rule. The DOJ describes the ancillary restraints doctrine: “Under that approach, a court first decides whether the challenged restraint is ancillary to a legitimate collaboration and then (if the court answers that question in the affirmative) determines whether the overall arrangement is procompetitive under the rule of reason.” DOJ cert petition at 16. That’s a lot of judicial fact finding on a crucial element of a criminal Sherman Act prosecution.

The Per Se Rule May Be Unconstitutional but Not Criminal Sherman Act Prosecutions

The Brewbaker cert petition challenges the constitutionality of the criminal application of Section One of the Sherman Act. I believe that is going too far. The per se rule, not the Sherman Act itself, is unconstitutional. It would take more space than this already long blog post, and more brain power than I have at the moment, for me to flesh out this argument.Further, while the lack of a per se rule would hamper the Antitrust Division in certain criminal prosecution (heir locators and the labor market collusion cases come to mind), “hard core” cartel prosecutions would still be winnable and constitutional. And marginal cases (yes, that is in the eye of the beholder) could still be prosecutable as civil offenses. I believe that the Sherman Act can mean what it says and that a conspiracy to restrain trade can be a criminal violation. The problem with the per se rule is that the courts have never made a sufficient distinction between a civil case and a criminal case (more to come).

Brewbaker’s defense team and the DOJ are more than capable adversaries to present the per se issue, though there is no pressing reason to for the Supreme Court accept cert in this case. The Court has denied cert in two previous criminal matters challenging the per se rule. Cartel Capers, February 1, 2022 “Will the Supreme Court Grant Certiorari and Review the Per Se Rule?”[17] It may well deny cert again.

That’s it for now. Thanks for reading. Any feedback is always greatly appreciated.

Bob Connolly bob@reconnollylaw.com

[1] Lewis Crofts and Leah Nylen, December 9, 2015, Mlex Interview with Romano Pisciotti, available at https://mlexmarketinsight.com/insights-center/reports/interview-with-Romano-Pisciotti,

[2] Id. See also See Plea Agreement with Roman Pisciotti, https://www.justice.gov/atr/case-document/file/507541/download, which was discussed by Renata Hess in her remarks. See Remarks of Renata Hess, https://www.justice.gov/opa/speech/acting-assistant-attorney-general-renata-hesse-antitrust-division-delivers-remarks.

[3] Fines have also dramatically increased. The largest corporate fine in Socony Vacuum was $5,000. The largest corporate fine today stands at $925 million![3] See SHERMAN ACT VIOLATIONS RESULTING IN CRIMINAL FINES & PENALTIES OF $10 MILLION OR MORE, available at https://www.justice.gov/atr/sherman-act-violations-yielding-corporate-fine-10-million-or-more.

[4] 137 S. Ct 1975, 1990 (2017) (Gorsuch dissenting).

[5] This blog post is an abbreviated version of a longer article of the same title. The full article can be found at https://ssrn.com/abstract=3356731.

[6] Northern Pac. Ry. v. United States, 356 U.S. 1, 5 (1958).

[7] Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911).

[8] Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).

[9] United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967).

[10] Continental T.V., Inc., v. GTE Sylvania Inc., 433 U. S. 36 (1977).

[11] Albrecht v. Herald Co., 390 U.S. 145 (1968).

[12] State Oil Co., v. Khan, 522 U.S. 3 (1997).

[13] Klor’s Inc. v. Broadway-Hale Stores., Inc., 359 U.S. 207 (1959).

[14] Northwest Wholesale Stationers, Inc. v. Pacific Statioanery & Printing Co. 472 U.S. 284 (1985).

[15] International Salt. Co. Inc v. United States, 332 U.S. 392 (1947).

[16] Eastman Kodak Co. v. Image Tech. Serv. Inc. 504 U.S. 451 (1992).

[17] The blog post discusses the cert petition of Christopher Lischewski, [the tuna guy] which the Supreme Court later turned down.

DOJ Filed Cert Petition in United States v. Brewbaker

July 15, 2024 by Bob Connolly

The Department of Justice has filed a cert petition (here) asking the Supreme Court to reverse a Fourth Circuit decision which held that a bid rigging scheme was not a per se violation where the competing bidders also had a vertical relationship. In United States v. Brewbaker, 87 F. 4th 563 (4th Cir. 2023), the Fourth Circuit overturned the conviction of an executive [Brewbaker] for conspiring to violate Section 1 of the Sherman Act, 15 U.S.C. 1, by rigging bids to the North Carolina Department of Transportation [NCDOT]. Three corporations bid on the solicitation. One competitor had historically bid high and was not part of the agreement. The other two bidders had a manufacturer [Contech]-distributor [Pomona] relationship for aluminum structures that are installed to prevent flooding near roads, bridges and overpasses. The NCDOT contract was not to just purchase the aluminum structures Contech manufactured, but also the transportation, installation and labor required to erect the structures on highways. For years, (2009-2018) defendant Brewbaker obtained Pomona’s bid number and submit a higher complementary bid on approximately 340 contracts, insuring Pomona would win while meeting NCDOT’s three bid requirement to insure adequate competition. Before 2009 Contech sometimes was the winning bidder. The scheme appeared to be a classic bid rigging conspiracy including submitting false certifications that the bids were “submitted competitively and without collusion.”

The district court rejected Brewbaker’s pretrial motion to try the case under the rule of reason. The defense sought to introduce testimony of a respected economist that bidding coordination between a manufacturer and its distributor can be procompetitive and is admissible evidence in a rule of reason case. The district court rejected this argument. The jury received a per se rule instruction. Under the per se rule, the judge, not the jury makes the finding that the alleged agreement is a restraint of trade. The jury’s role is to find whether there was an agreement as alleged in the indictment and whether the defendant participated in that agreement. The jury convicted Brewbaker of the Sherman Act violation. He was also convicted of several fraud counts relating to the submission of false non-collusion certifications.

The Fourth Circuit reversed Brewbaker’s Sherman Act conviction, holding that the district court should have dismissed the charge of conspiring to violate the Sherman Act because the agreement to submit rigged complementary bids between a manufacturer and a distributor constituted a “hybrid restraint” rather than a horizontal restraint. The Fourth Circuit held that that pe se rule only applied to horizontal restrains and declined to “apply the per se rule to [this] new category of restraint.” The possible procompetitive benefits flowing from the manufacturer/distributor relationship and took the case outside of established horizonal restraint per se category. United States v Brewbaker, 87 F. 4th 563 (4th Cir. 2023).

The question presented in the DOJ cert petition is “Whether the existence of a vertical relationship between the competing bidders precluded the application of the established per se rule against horizontal price fixing.”

The Risk to DOJ in Seeking Cert

The DOJ persuasively argues that Brewbaker participated in a run-of-the-mill public procurement bid rigging scheme. It is not unique for competing bidders to have some form of vertical relationship,. The DOJ cited US v. Socony-Vacuum Oil Co, Inc, 310 U.S. 150 (1940), among other examples. It is a classic bid rigging scenario for the winning bidder to “pay off” the losing bidder with a subcontract or to purchase materials in exchange for a complementary bid. There are a variety of vertical relationships between bidders, and there will be many more if the Fourth Circuit opinion takes hold, but these have never been held to negate a per se label for those who secretly collude on the submission of competitive request for bids. I made these arguments in an earlier blog post criticizing the Fourth Circuit’s opinion: You Are A Competitor If You Say So–My Disagreement with Fourth Circuit’s Brewbaker Opinion, Cartel Capers, December 13, 2023.

Supreme Court jurisprudence is near the top of things that I am not an expert in. But despite my agreement with the DOJ’s position, I think there are risks to DOJ in seeking cert. If there is a per se rule, and there is, what Brewbaker engaged in was per se conduct. What has bothered me about the per se rule, for as long as I thought about the per se rule enough to be bothered, is that the per se rule is nowhere to be found in the Sherman Act (textualism); the per se rule and the rule of reason were created by the Supreme Court (judicial legislation); and the per se rule takes away from the jury the crucial element of a Sherman Act violation, “Was the agreement a restraint of trade?” (various constitutional violations.) See, In The Clash Between The Venerable Per Se Rule And The Constitution, The Constitution Shall Prevail (In Time), Robert Connolly, COMPETITION: SPRING 2020, VOL 30, NO. 1.; The Rule of Lenity and the Per Se Rule, Cartel Capers, March 6, 2023.

Brewbaker is the latest attempt by courts to chip away at the per se rule. For example, in the DaVita no-poach collusion case, the court deviated from the per se rule jury instruction and charged the jury that the government’s burden was to prove the defendants entered into an agreement “with the purpose of allocating the market.” In other words, the government did not simply need to prove the defendants entered into a non-solicitation agreement [per se] but also that the defendants “intended to allocate the market as charged in the indictment.” [per se plus?] United States v. DaVita Inc., No. 1:21-CR-00229-RBJ, 2022 WL 266759, at *9 (D. Colo. Jan. 28, 2022); see also, “[T]he per se rule is the trump card of antitrust law. When an antitrust [party] successfully plays it, he need only tally his score.” Med. Ctr. At Elizabeth Place, LLC v. Atrium Health Sys., 922 F.3d 713, 718 (6th Cir. 2019) (quoting United States v. Realty Multi-List, Inc., 629 F.2d 1351, 1362–63 (5th Cir. 1980)

The DOJ is seeking review related to the application of the per se rule at a time when the Supreme Court has been very receptive to arguments from criminal defendants attacking their convictions. A recent LinkedIn post by Andrew Feldman reads: “Much has been written about the current Supreme Court, however, it is worth noting that, for criminal defense attorneys, especially white-collar defense attorneys, the Court has been knocking down innovative prosecution theories like duck pins at a Bowl America birthday party. Here are some of the big ones…. [listing six recent Supreme Court cases]. See also, Is It Time to File More Motions to Dismiss in Criminal Cases?, The Texas Lawbook, Bill Mateja and Kate Rumsey, April 29 2024 (“Ciminelli is the latest in a string of Supreme Court cases limiting the scope of federal criminal statutes and will not likely be the last.”) A similar opinion was voiced by Professor Mike Koehler: “Even though the current Supreme Court is often ideologically divided, the Court has shown remarkable consistency in recent years in rejecting (often times unanimously) overly expansive interpretations of a criminal statute by the Department of Justice.” The Supreme Court’s Consistency In Rejecting Expansive DOJ Interpretations, FCPA Professor Blog Post, June 28, 2024.

To be sure, the per se rule could hardly be called an “innovative prosecution theory,” having been established since at least United States v. Socony-Vacuum Oil Co., Inc., 310 U.S. 150 (1940). As the DOJ argues, it is common for Sherman Act coconspirators to have some sort of vertical relationship such as a buy-sell relationship. In Brewbaker, however, the vertical relationship was that of a manufacturer-distributor. Is applying the per se rule when that relationship exists an “expansive interpretation” of the per se rule properly rejected by the Fourth Circuit? While I don’t believe the manufacturer/distributor relationship precludes the application of the per se rule when as here, the contract was for much more than simply purchasing the product, it is a closer relationship than a simple buy-sell relationship competitors may have. But if the degree of the vertical relationship is determinative of whether the per se rule applies, the court, not the jury will be the fact-finder, which highlights the unconstitutionality of the per se rule. With defendants on such a hot streak in the Supreme Court, and the DOJ having convicted Brewbaker on various fraud courts (discussed below), it may have been best to take the win and try to limit the Fourth Circuit’s per se ruling as an odd outlier of a case.

Speaking of the Fraud Convictions…

In addition to the Sherman Act count, Brewbaker was convicted on five fraud counts related to his false certification that Contech bids were “submitted competitively and without collusion.” For mail or wire fraud, “a defendant must specifically intend to lie or cheat or misrepresent with the design of depriving the victim of something of value” or specifically intend “to deceive or cheat someone … for personal financial gain.” There was plenty of evidence from which the jury could find that Brewbaker submitted the false certifications to cheat NCDOT of funds. But because the case was tried under the per se rule, Brewbaker was not allowed to present evidence of his intent or any procompetitive (i.e.., non-cheating) benefits of the agreement. [“They [jury] didn’t hear evidence, however, as to the procompetitive intent or effects of Contech and Pomona’s particular setup.”]. I don’t believe any plausible defense existed to the fraud charges, but it seems Brewbaker should have been able to try. The per se rule in a case with a specific intent crime are at odds with each other.

Conclusion

The most likely outcome of this appeal is that the DOJ cert petition will be denied. But developments in this case could be very interesting and I look forward to reading Brewbaker’s reply to the DOJ cert petition.

A final note: I don’t think the DOJ would have had any trouble obtaining a conviction on the Sherman Act court even without the per se rule. As long as the DOJ sticks to so-called hard core price fixing [“the criminal cases we are charging are unmistakable fraud”],[1] juries are capable of determining whether the agreement was intend to restrain, suppress or eliminate competition.

Thanks for reading. Bob Connolly bob@reconnollylaw.com

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[1] Scott D. Hammond, Deputy Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, Transcript of Testimony Before the United States Sentencing Commission Concerning Proposed 2005 Amendments to Section 2R1.1 at 3 (Apr. 12, 2005), available at http://www.justice.gov/atr/public/testimony/209071.pdf. (here) Many senior Antitrust Division officials have made similar statements.