USA Law and Practice Contributed by: Djordje Petkoski, Matt Modell, Memmi Rasmussen and Tim Harris, A&O Shearman
1. Cartels Law and Regulation 1.1 Legal Bases The primary statutory base for challenging cartel behaviour or effects is the Sherman Act of 1890, which prohibits “every contract, combination or conspiracy in restraint of trade or commerce among the several states” . This law makes it ille - gal for businesses to collude with one another to fix prices, allocate customers or markets, or agree to engage in other anti-competitive behav - iour. 1.2 Regulatory/Enforcement Agencies and Penalties The Department of Justice’s Antitrust Division (DOJ or the “Division” ) and the Federal Trade Commission (FTC) are the federal agencies responsible for enforcement of the federal anti - trust laws. Each agency has a different jurisdic - tional focus and authority, although some areas overlap. The DOJ Antitrust Division is responsible for criminal antitrust enforcement. It has jurisdiction to investigate and prosecute criminal antitrust violations, such as price-fixing and bid-rigging conspiracies. Individuals and companies found guilty of criminal antitrust violations can face sig - nificant fines and imprisonment. The maximum criminal fine for an individual is USD1 million and the maximum prison term is ten years. Corpora - tions can face fines of up to USD100 million or twice the gain or loss resulting from the antitrust violation, whichever is greater. Attorneys general of individual states have the power to investigate and challenge cartel con - duct but generally focus on other types of anti - trust offences and historically have not pursued criminal cartel prosecutions.
1.3 Private Enforcement There is a private right of action to challenge cartel conduct in the United States. Private par - ties may bring civil lawsuits seeking damages or injunctive relief for harm suffered from antitrust violations. However, private actions must meet certain conditions before they can proceed. These include the following. • Antitrust violation: The plaintiff must prove that the defendant engaged in conduct in violation of the antitrust laws, such as price fixing or bid rigging. • Standing: The plaintiff must have suffered an injury caused by the defendant’s anti-compet - itive conduct. The injury must be of the type that antitrust laws were designed to prevent, such as higher prices or reduced output. • Causation: The plaintiff must be able to dem - onstrate a causal link between the antitrust violation and the injury suffered. • Damages: The plaintiff must demonstrate that they suffered damages resulting from the antitrust violation, such as lost profits or overcharges. Private actions seeking damages for price-fix - ing and other cartel conduct under the federal antitrust laws – ie, for Sherman Act violations, are reserved for direct purchasers of the alleg - edly price-fixed product. Indirect purchasers (eg, buyers of goods containing a price-fixed component) can seek damages under the anti - trust laws of certain states but not under federal law. While federal antitrust law does not permit indirect purchaser damages claims, indirect pur - chasers can bring state law damages claims in federal court. 1.4 “Cartel Conduct” The Sherman Act prohibits “every contract, combination, or conspiracy in restraint of trade
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