The Incoherence of Punishment in Antitrust

Abstract

Antitrust began with the common law tort of restraint of trade but has long since separated itself from the rest of tort law, particularly in the area of punishment. Since the passage of the Sherman Act in 1890, the principal remedies for antitrust violations have been criminal penalties and private treble damage suits. Antitrust stands relatively unique in the American tort universe with its treble damage remedy, its lack of punitive damages, its rejection of in pari delicto defenses, the peculiar combination of joint and several liability, the lack of contribution, and the way that settlements are credited against the potential liability of the remaining defendants in a case.

What has happened over the past 115 years is that the level of criminal punishment, both in terms of imprisonment of individuals and fines for corporations, has increased dramatically along with the vigor of government criminal enforcement of the antitrust laws. On the private side, the vigorousness of private treble damage litigation has waxed and waned depending on a number of factors, including the degree of activity by the federal government bringing illegal activity to light as well as the expansion and contraction of both substantive theories of liability and of standing.

As a result, there is a vigorous debate within antitrust law and policy whether the total punishment and compensation embodied in this system is too high or too low. Rather than reenter that debate about a system that is unlikely to change, I address a different and less frequently discussed issue - the incoherence of the present system of public and private antitrust enforcement.

We have reached a point where certain conduct prohibited by the antitrust laws is indeed punished harshly, yet other violations of the laws are effectively immune from punishment because of an evolving system of government enforcement priorities, substantive changes in the standards of liabilities, and restrictive rules of standing and antitrust injury which place some violations beyond effective change. Even some per se violations of the rule are beyond the reach of any meaningful punishment. It is not that antitrust damages are necessarily too high or too low, it is that they vary dramatically and that there is no a priori way to predict where punishment in a particular case or for a particular defendant will come out. This is the real but overlooked incoherence of antitrust punishment.

Keywords: antitrust, punishment, compensation, deterrence, disgorgement, remedies, treble damages, private rights of action

JEL Classification: K21, K41, K42, L40, L41, L42